CBR hikes rates sharply, but cycle nearing an end

Russia’s central bank (CBR) opted for a larger 100bp interest rate hike, to 6.50%, at today’s meeting and the accompanying communications provided clear guidance that the tightening cycle is nearing an end. With inflation likely to rise further and inflation expectations to remain elevated, we think that there will be a further 75bp of interest rate hikes, to 7.25%, at the next two meetings in September and October.