February CPI posted at 0.9%; neutral

Event: Rosstat figures published yesterday reveal that Russian CPI stands at +2.5% YTD, with CPI amounting to +0.9% in February. Annual inflation now stands at 7.2%, down 8.1% a month ago. 

View: The decline in annual inflation reflects high base of early 2009. Meanwhile, the actual 0.9% CPI figure in February is slightly above the consensus expectations of 0.8%, a figure also forecast by the Ministry for Economic Development. In our view this somewhat reduces the chance of more aggressive rate cuts being made in March.  Nevertheless, we still see a lack of lending growth in the economy, whereas bank deposits continue to rise. Additionally, the ruble has very been appreciating, which we believe is not supportive of domestic economic recovery. Thus, we expect at least a cumulative rate cut of at least 100bp cut in the coming months.