The Central Bank (CBRT) reduced the policy rate by 150bps to 38.0%, following the split among the rate cut expectations of 100-200bps. We forecast year end consumer inflation to be 25% on elevated inflation expectations and robust inertia, where the CBRT might continue to cut the rate toward 32% at the end of 2026.

Headline inflation realized as 0.87% m/m, lower than both market and our expectations(1.25%), led the annual rate down to 31.1%, yet the underlying trend remains strong. We now expect 31.5% inflation for the year end and CBRT to remain cautious with a similar 100 bps cut next week.