Russia | Persistent price pressures justify front-loaded hikes
The authorities’ decision to eschew lockdowns in the last 12 months has led to a steady return of mobility and economic activity to pre-pandemic levels. Recent economic indicators corroborate the narrative of a V-shaped recovery.
What you will learn:
- In May, headline inflation increased to 6.0% y/y following a short-lived deceleration in April. We have raised our end-year CPI forecast to 5.5% y/y, which is higher than both the government’s and CBR forecasts.
- Inflationary pressures continue to increase. The CBR has already hiked 75bps since March and brought its policy rate up to 5.0%.
- We believe the CBR has a reason to continue front-loaded monetary tightening. Another 50bp hike seems appropriate at the Friday policy meeting.
Tags:
Related Services
Post
Firms must brace for higher ‘new normal’ construction material prices
New research by Oxford Economics suggests that construction materials prices have shifted permanently higher due to the shocks of the past couple of years. Project managers and investors should anticipate costs being at least 15-20% higher in 2024 and onwards than in 2021.
Find Out More
Post
New Activity Trackers suggest momentum is waning
After a choppy first quarter of GDP data, our novel Activity Trackers (which incorporate proprietary daily sentiment data from Penta) suggest that economic momentum in EM Asia is on a softer trend in Q2 (at least outside of China) supporting our view of easing underlying inflationary pressures and diminishing appetite for further rate hikes.
Find Out More