Economists at Standard Chartered now expect the Central Bank of Russia (CBR) to cut its key rate to 7.5% from 8.0% on 16 September. They see a further 50 bps of cuts in Q4, taking the key rate to 7.0% by end-2022.

More rate cuts to come 

“We lower our end-2022 policy rate forecast to 7.0% from 8.0%; this incorporates the bigger-than-expected cut delivered in July, our view of a 50 bps move in September, and additional cuts for the rest of H2 on softening inflation and worsening economic conditions.”

“We expect another 50 bps of cuts in Q1-2023 to 6.5% – ‘neutral’, as defined in the CBR’s latest macroeconomic survey. We expect it to stay there for the foreseeable future, and we raise both our end-2023 and end-2024 policy rate forecasts to 6.5% (from 6.0%) accordingly.”

“We maintain our medium-term inflation forecasts but see upside risks. A significant import recovery (imports from China have risen nearly 80% since April) could weigh on the RUB, increasing inflation pass-through effects.”