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Russia CPI (Aug.)

The fall in Russian inflation to a weaker-than-expected 4.3% y/y last month strengthens our view that the central bank will lower its policy rate by 25bp when it meets tomorrow. Soft underlying price pressures are likely to prompt the central bank to deliver an additional 50bp of cuts beyond that, which is more than markets are currently pricing in.
William Jackson Chief Emerging Markets Economist
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Emerging Europe Economics Update

Q&A on Russia’s budget, deficit financing & default

In this Update, we answer a number of key questions on Russia’s public finances, including the likelihood of a sovereign default, the impact of higher energy prices and the collapse of the economy on the budget position, and how the government would be able to finance a budget deficit.

23 May 2022

Emerging Europe Economics Update

Bank of Israel steps up tightening

The Bank of Israel hiked its policy by a larger-than-expected 40bp today, to 0.75%, and the backdrop of a strong economy, tight labour market and mounting inflation pressures means that we think it will deliver further hikes at its upcoming meetings, to 2.25% by early next year.

23 May 2022

Emerging Europe Data Response

Poland Activity Data (Apr.)

April’s activity data for Poland suggest that the economy lost some steam at the start of Q2 and the effects of the war in Ukraine will remain a key headwind over the coming months. That said, we think Poland will avoid a contraction and outperform its peers in the rest of the region over 2022 as a whole.

23 May 2022

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Latin America Data Response

Brazil IPCA (May)

The further jump in Brazil’s headline inflation rate last month, to 8.1% y/y, makes a 75bp hike in the Selic rate (to 4.25%) next week certain and Copom will probably signal that another 75bp hike is on the cards at the subsequent meeting in August.

9 June 2021

Latin America Data Response

Mexico Consumer Prices (May)

The rise in Mexican core inflation to its highest rate in over three years in May, at 4.4%, appears mainly to be related to temporary factors. Policymakers at the central bank will probably continue to adopt cautious language but so long as core inflation falls back in the next few months, as we expect, Banxico is likely to refrain from raising interest rates.

9 June 2021

Latin America Economics Update

Revising up our Brazil growth forecast

The latest data suggest that Brazil’s economy has been much more resilient to the latest virus waves than we had anticipated and, as a result, we’re revising up our GDP growth forecast for this year to 4.5% (previously 3.0%). The brighter economic outlook means that we now think that the Selic rate will be raised from 3.50% now to 5.50% by the end of the year (previously 4.75%). We remain of the view that Copom will bring the tightening cycle to an end sooner than most currently think.

3 June 2021
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