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Consumer price inflation came in at 1.78% m/m, slightly below our expectation (1.85% m/m) and the consensus (1.9% m/m), bringing annual inflation down to 31.8%. We continue to maintain our 30% year-end inflation forecast, considering volatile energy prices and still-elevated, unanchored inflation expectations.

The CBRT again kept the policy rate and the interest corridor unchanged at 37% and 35.5%-40%, broadly in line with market expectations. This marks the fifth consecutive month in which funding has continued through the overnight lending rate (40%).

Financial conditions did not ease further in May-June period; and macroprudential tightening remained the key sector driver with further restricted credit growth caps. Credit growth is losing momentum, however the overall trend remains above the previous 2 years avg.

Consumer inflation rose 1.0% m/m in June, in line with our expectations, bringing annual inflation down to 32.1%. Despite lower energy prices and the postponement of the SCT hike on fuel, the unexpected July hike in health examination fees reduces the limited downside risk to our 30% year-end inflation forecast.

Debt sustainability metrics remain strong across sectors. However, signs of stress are gradually emerging through rising retail NPLs and an overall weakening net FX position.

We expect the disinflation process to remain broadly on track against a softer growth backdrop in the short term. Persistent inflationary pressures and external uncertainties warrant a more cautious policy outlook, while selective easing is likely to continue within an overall restrictive policy mix.

Consumer inflation materialized at 1.7% m/m, in line with our expectation, bringing annual inflation to 32.6%. Assuming a gradual reopening of Strait of Hormuz and some normalization in energy prices in 2H26, we maintain our year-end CPI forecast at 30%, while acknowledging upside risks amid war-related uncertainty