Page 15 - RusRPTFeb19

(CPI) heatmap shows that inflation is in single figures for almost all the countries in the region.
The problem children in the region that are still battling high inflation are Turkey and Iran, which are both in the midst of economic crises – the former self inflicted and the latter due to new US sanctions.
The real success story has been Ukraine which is recovering from an almost total collapse of its economy in 2015. Encouragingly the heatmap shows that inflation fell to 10% as 2018 came to an end from over 60% in April 2015. The National Bank of Ukraine (NBU) has shown real backbone and made growing- killing rate hikes three times in 2018 putting controlling inflation above stimulating spluttering growth. As a result it has delivered stability and burnished its reputation for independence in the process that will pay off soon when the country goes back to the bond markets in 2019.
But with a few exceptions, almost all of the other countries in the region have inflation at 3% or lower.
Monetary policy rates too high
However, this low inflation has come at the price of keeping interest rates high in many countries, which is clear from the second heatmap and shows the region is still a two track tale.
In general the economies of central and southeastern Europe have also managed to keep central bank monetary policy rates low, whereas in Eastern Europe and Central Asia the fight against inflation is clearly still in full swing as central banks in those regions have been to keep the cost of borrowing high.
Again Turkey and Iran stand out in the heatmap as having very high rates as they deal with the aftershocks from their crises, but Ukraine is also in the red and rates rose somewhat from 16% to 18% over 2018 as the NBU struggled to control strong inflationary pressures.
In almost all of the other countries the trend was of falling rates, or in a few cases the upward adjustments were minor, except Russia, which started 2018 with another rate cut in a series of constant cuts over the last four years. However, the easing cycle in Russia came to an end in September when the Central Bank of Russia (CBR) unexpectedly hike rates in a preemptive move that anticipates new “crushing” sanctions from the US in 2019. That will hurt Russia’s growth story, but the state is more concerned with defending itself
15 RUSSIA Country Report February 2019 www.intellinews.com