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Bank of Russia will cut key rate by 50bps Friday: Sberbank CIB

26.07.2016

Bloomberg

By Olga Tanas

“Easing is needed to prevent monetary policy from becoming too tight,” Sberbank CIB chief FX, rates strategist Tom Levinson says in e-mailed research note.

* Inflation evolving in line w/ forecasts, real policy rate near 5%
* Rate cut will also reduce ruble’s attractiveness by eroding its high yield
* “The central bank will look through the current currency wobble, we believe, and view a cut as a prudent means of deterring speculative inflows without compromising its inflation objective”
* Key rate seen at 9% by year-end, at 8% or lower in 3Q 2017