CEEMEA Week Ahead: MNB to Cut 25bp, BoG, TCMB, SARB, NBK and CBR on Hold; CPI in South Africa

Research evidence excerpt

CEEMEA Week Ahead: MNB to Cut 25bp, BoG, TCMB, SARB, NBK and CBR on Hold; CPI in South Africa

de, the situation in the Middle East remains

uncertain and oil prices volatile, while the rise in Q2 BER inflation expectations was an

unwelcome development from the SARB’s perspective. On balance, we think the MPC is

likely to keep rates on hold, although we anticipate a split vote and view the decision as a

relatively close call. See the full preview here.

Kazakhstan: NBK to Remain on Hold Amid Slower Disinflation

The National Bank of Kazakhstan’s MPC meets on Friday, 24 July. In line with consensus,

we expect the NBK to keep the policy rate unchanged at 17.00%. In our view, the

relatively large 100bp cut in June, which marked the start of the easing cycle, signalled

that the pace of cuts is likely to slow from here. Disinflation also lost momentum in June

despite the delay to the electricity tariff increase, prompting NBK Governor Suleimenov

to note that the Committee is not in a hurry to lower rates. Meanwhile, household

12-month-ahead inflation expectations rose notably in June, reversing April’s

improvement. While renewed Tenge strength in recent months could have strengthened

the case for a rate cut next week, the NBK’s plan to abolish mandatory FX sales by

quasi-sovereigns suggests that the Bank prefers to lean against excessive Tenge

appreciation using the FX market rather than interest rates. We continue to expect

USDKZT to trade range-bound at 470-490, as the NBK is unlikely to tolerate

depreciation beyond this range while inflation remains elevated. We expect the Bank to

proceed more cautiously with rate cuts over the remainder of the year amid slower

disinflation, with the policy rate falling to 15.50% by end-year.

Russia: CBR to Pause its Cutting Cycle