Russia: Central bank to wait and see till December - ING

Dmitry Dolgin, Chief Economist at ING, suggests that they agree with the consensus view that the central bank of Russia has no urgency in changing the 7.5% key rate at the next meeting as current trends aren't in breach of the guidelines the monetary authorities provided after hiking rates in September.

Key Quotes

“CPI growth has accelerated from 3.1% year on year in August to 3.4% YoY in September and may reach 3.6% YoY in October - predominantly as a result of the base effect in the food segment.”

“Economic growth, according to preliminary government estimates, has slowed down from 1.9% YoY in 2Q18 to 1.3% YoY in 3Q18 amid some cooling in the consumer confidence. The resulting 1.6% YoY GDP growth in 9M18 is in line with the central bank's estimate of the potential growth rate of 1.5-2.0% and suggests there is no immediate risk of overheating.”

“Since mid-September, when the central bank decided to raise rates and suspend the $5-6 billion monthly FX purchases for the Finance Ministry, the ruble has appreciated 4% to the USD, while the yield curve on the benchmark 2-10Y OFZ narrowed by 20-40 bps - suggesting calmer market conditions.”