Page 47 - RUSRptAug18

2018 was interrupted by the latest round of US sanctions in April.
In the Reuters survey 10 out 19 analysts expect the key rate to remain unchanged at least until the end of 2018, while the rest believe that the rate could still be cut by a minimum step of 25bp to 7% by the end of the year.
The CBR commented on July 27 that "the switch to the neutral monetary and credit policy is more likely in 2019," leaving less chances for any interest rate action in 2018.
The regulator even warned that a "certain degree of tightness of the policy" could be required to counter-balance the secondary inflationary effects of the VAT hike and other government tax measures.
VTB Capital previously argued that the only development powerful enough to compel the CBR to ease in 2018 would be a major CPI surprise, such as if price growth remains below 3% year-on-year. Renaissance Capital did not expect any rate cuts until the third quarter of 2019.
Despite the CBR warning of rising inflation due to the VAT hike, inflation fell modestly in June to set a new post-Soviet record low of 2.3% year-on-year. But there were signs of price pressures building up in the food and services segments, and the analysts expect inflation to climb back to around 4% by next year.
47 RUSSIA Country Report August 2018 www.intellinews.com