Russian Macro – Falling Inflation to Pull Key Rate Down

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Rosstat reported that the YTD inflation reached 2.4% as of September 2, which is already lower than the cumulative inflation over the same period in 2018. In August a 0.2% m-o-m deflation was recorded implying that the cumulative inflation remained at zero in the summer months. Given that last year the m-o-m inflation accelerated in 4Q18, while this year inflationary pressure is not high, inflation may fall to around 3.4-3.5% by the year end and no later than in November 2019 it will have fallen below the CBR’s 4% target. Decelerating inflation amid reduced inflationary pressures wi