Macroeconomic Forecast Russia

Russian inflation fell further in January, to a 32-month low of 8.0% y-o-y. Even as commodity prices rose through to January, weak domestic demand linked to a still struggling banking sector ensured that pressures remained disinflationary. On the back of low consumer price growth, the Central Bank of Russia cut the policy rate by 25 bps on February 24, to a record low 8.50%. Though we believe that disinflation is likely to run further, a tentative macroeconomic recovery through H210 should push headline consumer price growth back to 9.50% by end-year. In line with the inflation outlook, we also maintain that interest rates will be hiked back to 9.50% over the same period.

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