July 8, 2019 / 3:29 PM / 3 months ago

UPDATE 1-Russian inflation slowdown boosts rate cut expectations

 (Adds details, analysts comment)
    MOSCOW, July 8 (Reuters) - Inflation in Russia slowed in
June, data showed on Monday, boosting market expectations that
the central bank would consider cutting rates again this month.
    Inflation, the central bank' main remit, slowed in June to
4.7% in year-on-year terms from 5.1% in May, showed data from
the Federal Statistics Service, or Rosstat.
    The annual inflation reading slipped below the 4.8% level
predicted by a Reuters monthly poll and inched closer to the
bank's ultimate inflation target of 4%.
    "The lower than expected print justifies our call for a 25
basis point rate cut in July," said Dmitry Polevoy, chief
economist at Russian Direct Investment Fund.
    "An inflation slowdown should support further monetary
easing. We expect the CBR to cut the key rate by 25 basis points
to 7.25% on July 26," Alina Slyusarchuk from Morgan Stanley said
in a note.
    Experts polled by Reuters in late June had on average
predicted the central bank to keep the key rate unchanged at its
next board meeting in late July after the bank trimmed the rate
to 7.50% in June.
    Analysts from Capital Economics research firm also said the
further fall in inflation in June "alongside recent dovish
comments from the central bank" had prompted them to pencil in a
25 basis point rate cut in July. 
    Central Bank Governor Elvira Nabiullina said last week the
Russian central bank will consider a rate cut at its board
meeting in July, including an option to lower rates by as much
as 50 basis points.
    Reuters will carry out a planned poll on the July 26 board
decision later this month and will publish its results on
Monday, July 22.
    The economy ministry, commenting on Rosstat data, said on
Monday it expected annual inflation to slow further to 4.5-4.6%
in July.
    Rosstat gave the following details: 
     RUSSIAN CPI              June 19   May 19    June 18 
     Mth/mth pct change       +0.0      +0.3      +0.5 
     - food                   -0.5      +0.4      +0.4 
     - non-food               +0.2      +0.2      +0.4 
     - services               +0.6      +0.4      +0.7
     Y/Y pct change           +4.7      +5.1      +2.3
     Core CPI y/y pct change  +4.6      +4.7      +2.3
    NOTE - For key Russian indicators click here. 

 (Reporting by Andrey Ostroukh, editing by Ed Osmond)
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