Expect CBR to stay on hold tomorrow

RUSSIA ENERGY / FINANCE - In Brief 28 Jan 2016 by Marcel Salikhov

Rising oil prices gave support for RUB and some relief for authorities. Last week we wrote that in case of continued pressure on RUB due to plunging oil prices CBR may decide to increase rates on Friday’s meeting. This is not the case, at least for now. RUB reacted strongly to higher oil this week. We expect to CBR to stay on hold tomorrow. December CPI was +0.8% m-o-m (+12.9% y-o-y) as compared to +0.8% m-o-m (+15.0% y-o-y) in November. Weekly inflation data shows that in January inflation stayed at the same range of monthly growth (approximately +0.8% per month or +0.2 per week). While due to ‘base effect’ annual inflation may fall below 10% y-o-y in Janaury it’s not yet an indication of decreasing inflationary pressure. Inflationary expectations declined in December according to consumer survey data funded by CBR but remained relatively high. So we think monetary authorities will choose to stay on hold once more. CPI by major groups, Jan 2013 - Dec 2015

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