Bank of Russia’s Governor Elvira Nabiullina sent out a somewhat hawkish signal ahead of widespread expectations for a policy rate cut this Friday. In an unscheduled speech minutes before quiet period, Bank of Russia Governor Elvira Nabiullina said "Don’t wait for a sudden outside improvement or easing of domestic monetary conditions."
The Bank of Russia will continue its “moderately tight” monetary policy, with the inflation rate now below its benchmark for the past eight months, Nabiullina said on Friday. All things being equal, the key rate will need to be higher in the conditions of the structural liquidity surplus than during a deficit, according to Nabiullina.
Derivatives traders scaled back their wagers for a rate cut in the next three months after Nabiullina’s first expansive speech on monetary policy since mid-summer. Forward-rate agreements fell to last week’s low on Friday, signaling 49 basis points of decreases. That’s down from 71 basis points on Sept. 1.