Russia: Fiscal driver for rates

  • Orthodox policy is replenishing the fiscal buffer (‘NWF’) – this week to overflow point
  • With growth faltering, the government thinks of using the NWF as a stimulus
  • The CBR says – “stop: if you do that, we will tighten monetary policy”
  • Why so severe? Because a NWF-funded demand boost would eviscerate the fiscal rule
  • The CBR line will prevail here, but its victory won’t be fully evident until 2021
  • Meanwhile, expect easing to remain cautious: policy rate at least 250bp above core inflation

Economics

Politics

05 Apr 2019

Russia: Labour fix

Markets

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