Back
4 Feb 2015
Russian services PMI falls, CBR might cut rates further – ING
FXStreet (Barcelona) - Dmitry Polevoy of ING, shares that the fall in Russian services PMI from 45.8 to 43.9 completes the picture for a deteriorating Russian economy in early 2015, and further forecasts CBR to cut the key Russian rate to 10.5% by 2015-end.
Key Quotes
“Services PMI fell further in January to 43.9 from 45.8 in December with composite gauge at 45.6 from 47.2.”
“The services PMI fall was due to a further fall in new orders, which the reporting companies linked to the weakening economy, FX crisis and high interest rates.”
“Services companies have continued shedding staff as well as increasing prices at an all-time high rate, reflecting rising costs of inputs.”
“The overall level of sentiment remained negative, while slightly improved from December levels.”
“Overall, the fall in manufacturing and services indices drove the composite PMI down, suggesting a big hit to economic activity in January. This fits our expectations of a big reversal in IP growth in Jan-15 as well as a deepening GDP fall since the beginning of 2015.”
“The CBR will likely continue policy easing as yesterday’s comments from CBR Chairman Nabiullina hinted that the regulator remained focussed on inflation targeting, but not at any cost (not accepting a sharp cooling of the economy).”
“Therefore we expect the key rate in 2015 to go down further (INGF: 10.5% by 2015-end), even if the CBR takes a pause after the surprise cut last Friday.”
Key Quotes
“Services PMI fell further in January to 43.9 from 45.8 in December with composite gauge at 45.6 from 47.2.”
“The services PMI fall was due to a further fall in new orders, which the reporting companies linked to the weakening economy, FX crisis and high interest rates.”
“Services companies have continued shedding staff as well as increasing prices at an all-time high rate, reflecting rising costs of inputs.”
“The overall level of sentiment remained negative, while slightly improved from December levels.”
“Overall, the fall in manufacturing and services indices drove the composite PMI down, suggesting a big hit to economic activity in January. This fits our expectations of a big reversal in IP growth in Jan-15 as well as a deepening GDP fall since the beginning of 2015.”
“The CBR will likely continue policy easing as yesterday’s comments from CBR Chairman Nabiullina hinted that the regulator remained focussed on inflation targeting, but not at any cost (not accepting a sharp cooling of the economy).”
“Therefore we expect the key rate in 2015 to go down further (INGF: 10.5% by 2015-end), even if the CBR takes a pause after the surprise cut last Friday.”