Ukraine’s Kursk offensive, CBRT’s forward guidance

Ukraine's surprise incursion into Russia continued this week and although developments are highly uncertain at this stage, it has big implications for the war. On balance, we think it could delay any peace deal but a lot will also depend on Russia's military response and whether the government commits additional resources to the frontline, which would complicate the central bank's efforts to tackle overheating and inflation. 

Elsewhere, the subtle change in the Turkish central bank's communications at its meeting this week suggested that inflation expectations are gaining importance and that they might become a bigger hurdle to starting a monetary easing cycle. There's still a lot to do to bring inflation expectations down and we still think that interest rate cuts won't come until next year.