Russia will face higher inflation and a weaker rouble this year, but that will not prompt the central bank to raise interest rates, a Reuters monthly poll of 20 analysts and economists forecast on Thursday. After reaching the central bank's target of 4 percent in 2018, annual inflation in Russia is on track to accelerate further to 5.1 percent in 2019, the consensus forecast showed.
Annual consumer inflation, the central bank's main remit, should get a boost from the planned increase in value-added tax to 20 percent from 18 percent as well as from the pass-through impact of the weaker rouble. The rouble, vulnerable to money flows driven by geopolitical concerns, is likely to stay weak in 2019, the poll showed.
The geopolitical premium in the rouble has vanished for now because Washington did not hit Russia with harsh sanctions in autumn 2018, as some expected, and it lifted some sanctions on aluminium giant Rusal, said Vladimir Miklashevsky, an economist at Danske Bank in Helsinki. "However, the new US Congress has started its sessions and a focus on anti-Russia sanctions may return as early as in the first quarter of 2019," Miklashevsky said.
"The risk of escalation in the stand-off between Russia and Ukraine also remains in place. If realised, it would send the rouble lower." The room for the rouble's strengthening is also limited by the central bank's decision to resume daily FX purchases on the local currency market to prop up state reserves.
The rouble is seen at 67.00 versus the dollar and at 80.36 against the euro a year from now, the January poll showed. That compares with 66.85 and 76.50, respectively, predicted in the December poll. The Russian central bank is not expected to jack up rates, either. All analysts polled forecast that the central bank would hold its key rate unchanged at 7.75 percent at its next board meeting, on February 8. The consensus forecast is that the rate will stay at that level by the end of 2019.