Summary:
- Macroeconomic projections for the next 3 years are mildly optimistic – based on projected oil prices.
- CBR's refinancing rate cut with corresponding ruble devaluation shows the extent of liquidity problem
From... Deutsch Bank Morning Comment:
Headline: Government Approves Macroeconomic Projections for 2010-2012
- Projections for 2010-12 based on oil price projectsion -- $54/bbl in 2009, $55-2010, $56-2011, $57-2012
- Economy expected to recover from 8.5% contraction to growth of 1% in 2010, 2.6%-2011, 3.8%-2012
- Exports will recover by 7-8% after a 50% contraction
- Government approved tariff increases on gas, electricity, and railways
- The reduction in growth of tariff increases in due to higher concerns on the poor performance of the real sector
From... Business New Europe Daily News Letter:
Headline: Rate Cut Proves Fragility of Ruble Appreciation
- CBR announced a cut in the refinancing rate to 11%
- Devalued the Ruble in response – underscores the liquidity problem
- CBR has been cutting the refinancing rate according t slowing inflation
- Cuts are intended to lower lending rates, but there is lack of long-term funding
- Decline in value of the Ruble most likely exacerbated to falling oil prices
- Could also reflect expectations of further rate cuts; the expectation that poor growth will lead to deflation
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