Russia Maintains Its Orthodoxy
By Tom Butcher, Associate Director, VanEck
The ruble is under pressure and recent actions by the U.S. State Department have not helped. It recently sent Congress a list of entities linked to the defense and intelligence arms of the Russian government that “will guide sanctions the administration must begin to take on Jan. 29, 2018.” 1
The question is whether such reaction is justified policy-wise. On October 27, Russia’s central bank cut its policy rate by a cautious 25bps (down to 8.25%), thereby reaffirming its orthodox credentials. The bank’s move reflects its concerns about both the nature and the sustainability of disinflation (i.e. mostly food prices or something more permanent). In addition, the bank’s measure of inflation expectations stopped falling in September – edging up to 9.6%.
It will be interesting to see when, or if, this pressure lifts.
Central Bank of Russia - One Week Auction Rate (%)
About the Author:
Tom Butcher is an Associate Director at VanEck. Formerly an independent writer, researcher, and consultant focusing, amongst other things, on strategic materials, in particular metals, Mr Butcher has 38 years of experience in finance. He has lectured and spoken at conferences and universities around the world.
The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.
department advances Russia sanctions after delay, October 26, 2017