In Russia, clearly, the CBR is facing a dilemma with growth remaining depressed, and the downtrend in inflation has recently stalled. Inflation has slightly increased in August to 15.8% y/y, driven by rising goods and services inflation.



"The CBR is likely to keep its policy rate unchanged at 11% at its MPC meeting. Since the July meeting, the RUB has weakened about 12% and the oil price has been quite volatile, though it remained relatively flat at about $50", says Barclays.



While the FX pass-through has been modest so far, RUB weakness is likely to have a negative effect on inflation. Against this backdrop, we think the CBR will stay put, despite its dovish bias to support the economy.



"The market is pricing the policy rate to remain flat throughout the year, hence, a surprise cut would lead to a negative reaction in the RUB", added Barclays.