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.