Page 70 - bne IntelliNews Country Report: Russia Dec17

inflationary expectations by the population who refuse to believe the low inflation numbers as well other medium-terms inflationary risks. The CBR wants to stick to a moderately tight monetary policy despite the pressure from the government to support growth with lower interest.
The CBR decided to cut the key interest rate by 25bp at the board of directors meeting on October 27, in line with the expectations.
Putin's inflation outlook for 2017 is even more aggressive than the 2.7-3.2% range of the Ministry of Economic Development that has been repeatedly encouraging CBR to cut rates faster.
Most recently the governor of the CBR Elvira Nabiullina admitted that inflation in 2017 could fall to 3.2%, although the regulator's official outlook remains a range of 3.5-3.8%.
Last week Alfa Bank argued that "at the moment we do not agree with the government’s concerns that low inflation is the result of the tight monetary policy of the CBR."
The analysts that forecasted 2.8% inflation in October maintained "medium-term inflationary risks are considerable and that the CBR should thus not accelerate interest rate cuts."
However, VTB Capital previously argued that "the incoming data for October and November might nudge the Board to opt for a more ambitious cut of 50bp," while noting that "this would call for surprises from inflation reports, banking stats and economic activity data to combine into a convincing case."
70 RUSSIA Country Report December 2017 www.intellinews.com