Page 69 - RusRPTMar20

sign that the institution is not threatened by the rebalancing of power from the recent government reshuffle. Early reports showed that ​new mechanisms of co-ordination​ will be established between the CBR, the government and the Kremlin.
Notably, cutting the rate to 6% marks bringing the monetary easing cycle to the lower band of the 6-7% neutral range. The question going further is the CBR outlook for 2020 and whether another easing cycle will be under way as soon as 1H20.
Governor Elvira Nabiullina commented on February 7 that another rate cut would be “highly likely” already at the March 20 meeting, according to RIA Novosti.
Analysts surveyed by ​Vedomosti d​ aily agree that the CBR is likely to revise the neutral range of the key interest rate of 6-7% and drive it downwards with further cuts, levelling inflation off at the target 4%.
What is more important than the February cut itself is “quite a dovish communication: the CBR does not want to “wait and see” any more and is ready to “simulate” the economy,” Renaissance Capital commented on February 10.
Should inflation remain at 0.4% month-on-month (seen in January) the CBR will have to keep cutting the rate, based on the latest guidance by Nabiullina, Natalia Orlova of Alfa Bank told ​Vedomosti.​ The consensus expectation shifts to another 25-50bp cut already in 1H20
69​ RUSSIA Country Report​ March 2020 ​ ​www.intellinews.com