Russia: CBR should act decisively – Rabobank

Last Friday, Russia’s central-bank Governor Nabiullina explicitly said that a rate cut will be the main option that the CBR will today, per Rabobank. EUR/RUB is sitting at 80.255.

Key quotes

“The outlook for the Russian economy has definitely deteriorated further after the government imposed tighter restrictions to flatten the coronavirus curve. The spread of Covid-19 is reportedly one of the fastest in Europe and it is quite similar to that of Italy and Spain during the second half of March.” 

“We anticipate at least a 75bp cut to 5.25% to compensate for the lack of action last month. While a 50bp move would be in line with the consensus expectation, in our view, the CBR should act more decisively to send a very clear signal that it intends to do whatever it takes to prevent a prolonged recession from transforming into a depression.”