At today's policy meeting, the Russian central bank is expected to reduce its policy rate from 11% to 10%. The USD/RUB pair is unlikely to react to such a move, economists at Commerzbank report.
“Today brings the next scheduled meeting of CBR, at which markets widely the base rate to be cut once again. For some weeks, a 100bp cut had been widely discounted.”
“Since Russia’s inflation rate dropped from c.20% to c.17% in May, and the rouble resumed its appreciation streak in recent days, some expectations of 150bp or 200bp cut have also crept in. Nevertheless, 100bp still is an overwhelming favourite – perhaps because CBR is viewed as an ultra-cautious central bank.”
“We doubt that the magnitude of a rate cut today will have much effect on the (now rather exotic) USD/RUB exchange rate.”
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