The Russian central bank (CBR) cut its one-week repo rate by 50bp, to 11.0%, today, but the recent fall in the ruble triggered a clear shift in the Council’s tone, and policymakers are no longer committing themselves to lowering interest rates further. For now, the CBR remains of the view (as do we) that inflation will drop sharply early next year and, as a result, we think the easing cycle still has further to run, albeit at a more gradual pace than before. In light of this, we have revised our end-2015 interest rate forecast to 10.5% (previously 9.0%), but our end-2016 forecast remains unchanged at 9.0%.
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