USD/RUB: Commerzbank expects the rouble to weather the interest rate drop.

At a meeting scheduled today, Russia’s central bank is widely anticipated to cut the policy interest rates. But Commerzbank economists

April 29, 2022 - 04:01 PM 269 views

USD/RUB: Commerzbank expects the rouble to weather the interest rate drop.

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© USD/RUB: Commerzbank expects the rouble to weather the interest rate drop.

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At a meeting scheduled today, Russia’s central bank is widely anticipated to cut the policy interest rates. But Commerzbank economists don’t expect the policy interest rate decision to have a huge impact on the Russian rouble.

The tangential interest rate meeting of the CBR is

The consensus is for a 200-bp cut, but the economists won’t be surprised with a 300-bp cut either.

Currently, the inflation rate is running at 16–17% in the YoY region, and there is no room to cut the inflation rate further.

Because of the steady exchange rate, the CBR has the luxury of anticipating lower inflation in the months ahead and becoming more supportive of the real economy now by decreasing rates.

But, once the real economy starts to outweigh the previous interest rates, then a bigger rate cut will be easily justified. The extent of the decrease today has little impact on the (fake) rouble exchange rate that we see on our screens.

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