The Bank of Russia raised its key interest rate to 7.75%
At this meeting, the CBR launched a preemptive strike on inflation, raising the key rate to 7.75%. The decision fits into the international trend. On 18 and 19 December 2018 will host the next meeting of the Federal reserve. It will also determine the fate of the bet. With high probability the decision will be made about her rise from 2.25% to 2.5%.
The decision to raise the rate looks logical against the background of accelerating inflation to 5.0%-5,5% and possibly 6%. The VAT increase and rising gasoline prices will play a role, as well as ongoing high inflation expectations of citizens. We believe that in 2019 the key rate will be raised to 8% and only at the end of next year CBR will return to monetary easing.
We believe that the regulator’s decision is positive for the Russian ruble, neutral for the stock market and negative for preferred shares “Surgutneftegaz”.
The Director of analytical Department,