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    CBR cuts rates but RUB looks at oil prices - TDS

    According to Paul Fage, Strategist at TD Securities, the Russian ruble will be much more influenced by crude oil prices rather than Central Bank of Russia (CBR) interest rate policy.Key Quotes:“At today’s (10 June) Board meeting the CBR cut its Key Rate by 50bps to 10.5%; this was in line with our expectation. The consensus was pretty evenly split with a small majority expecting a 50 bps cut, the rest expecting no change.”“The CBR justified the cut on the grounds of “positive trends of more stable inflation, decreased inflation expectations and inflation risks against the backdrop of imminent growth recovery in the economy.” The CBR sees inflation falling to less than 5% in May 2017 and reaching the 4% target in late 2017.”“USDRUB only moved a bit higher on news of the cut and indeed shortly after fell. We think that so long as the CBR maintains its cautious policy, with rate cuts being driven by improved inflation expectations, then USDRUB will continue to be driven principally by oil rather than monetary policy.“We expect the CBR to cut further and are looking for 100 bps of additional cuts this year.”  

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