Page 104 - RusRPTOct20

the main reasons for the CBR to put the easing cycle on pause.
eager as before to help the government out with monetary stimuli.
of Russian Ministry of Finance ruble-denominated OFZ treasury bills but
The CBR indeed commented that inflation had outpaced the expectations, geopolitical risks​.
Still, the CBR sees a prevalence of disinflationary trends in the medium-term
perspective. The inflation outlook was maintained at 3.7-4.2% for 2020 and at
3.5-4% for 2021, with 4% reiterated as the main target.
In addition, the debate on state debt between the Finance Ministry (MinFin)
and the CBR has recently been restarted, and the regulator might not be as
Emerging Markets (EMs) in general have been selling off over fears of a
second and even third wave of the coronacrisis. Russia has seen mild selling
recorded a modest inflow in the week ending September 18, ​BCS Global
Markets​ reports. With the MinFin intending to increase its borrowing, cutting
rates again would make selling more bonds more difficult.
Analysts surveyed by ​Vedomosti d​ aily reminded that CBR officials admitted
that the inflation rate in August of 3.6% was ​higher than guided​, which alone
should be enough for the inflation-minded central bank to keep the rate flat.
attributing this to fast recovery of consumer demand after the lifting of
lockdown restrictions, as well as the ​ruble weakening due to increased
The political instability in Belarus and rising sanction risks for Russia after the
poisoning of dissident Alexei Navalny have already ​affected the ruble
exchange rate​, b​ ne IntelliNews​ reported.
The possibility of further interest rate cuts will be measured against compliance
with the inflation outlook, the CBR wrote.
The CBR still has two more policy meetings after September, in October and
December, but high uncertainty associated with the US presidential elections
in November might leave the central bank with space for a rate cut only in
December, the chief economist of Alfa Bank, Natalia Orlova, previously
argued.
The Russian central bank (CBR) has decided to start issuing forward
guidance on the likely trajectory of interest rates. ​The CBR has long
avoided issuing forward guidance for fear that markets will perceive the rates
projections as commitments, rather than forecasts. Onlookers have not found
this apprehension compelling. They note that the decision to start issuing rate
trajectories will increase financial actors’ understanding of how the CBR views
economic conditions. From January 2015 to September 2018, markets
104 ​RUSSIA Country Report​ October 2020 ​ ​www.intellinews.com