Putin’s Rate Wish Echoed by Market Stirs Skeptics: Russia Credit - Bloomberg:
"Some Russian traders are already betting on a reduction in the biggest interest-rate increase in 16 years.
While there are plenty of obstacles to lowering rates with inflation at a 3 1/2-year high and the ruble set for the biggest drop since 1998, derivatives used to predict future borrowing costs signal cuts are in store in the first quarter. Central bank Governor Elvira Nabiullina unexpectedly raised the benchmark to 17 percent from 10.5 percent two weeks ago, putting the economy at risk of a deeper recession to prop up the ruble.
“The rate increase was a stopgap measure to stabilize the situation on the FX market,” Dmitriy Gritskevich, an OAO Promsvyazbank analyst in Moscow, said by e-mail on Dec. 26. “We expect the central bank to start lowering rates as soon as the next three to six months.”"
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