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Bank Of Russia Surprises With Unexpected Rate Cut, Brings YTD Total Of Nations Easing To 14

Tyler Durden's picture




 

Yesterday we reported that in less than 1 month in 2015, so far a whopping 13 countries have proceeded with "surprising" rate cuts: Singapore, Europe, Switzerland, Denmark, Canada, India, Turkey, Egypt, Romania, Peru, Albania, Uzbekistan and Pakistan. As of this morning, make that total 14, because in one of the more "surprising surprises" so far, it was none other than the Bank of Russia which cut its main interest rate from the 17% shocker it instituted at an emergency session on December 17 to halt the Ruble collapse (as a result of the crude price plunge) to 15% less than an hour ago. At the same time it cut the deposit rate to 14% and the repo rate to 16%.

More rate cuts may be coming:

  • NABIULLINA SAYS 15% RUSSIA'S KEY RATE STILL FAIRLY HIGH

Not surprisingly, the ruble tumbled in response with the USDRB jumping to 72, while the RTS stock index was down 2% at last check.

The question why Russia decided to cut rates now is relevant, and likely has to do with both the recent stabilization of crude prices in the mid-$40s, coupled with pressure from the administration to lower rates which have led to the Russian economy and banking sector grinding to a near halt.

More from the WSJ:

This was the first rate-setting meeting with Dmitry Tulin, a former deputy chairman who replaced Ksenia Yudaeva as monetary-policy chief earlier this month.

 

The statement issued after the central bank’s board meeting was the latest acknowledgment by Russia’s leadership that its economy will face protracted pain amid falling oil prices and a confrontation with the West over Ukraine.

And Bloomberg's take:

The last time the currency weakened past 70 was on Dec. 17, a day after it tumbled past 80 in a rout that spread across emerging markets. The ruble has fallen 14 percent in January, weighed by oil’s slide and worsening violence in Ukraine. European Union foreign ministers gave the go-ahead on Thursday to prepare steps that would move beyond last year’s decisions to ban financing for Russian state-owned banks and prohibit the export of advanced energy-exploration technology.

 

“The central bank might have weighted in the risk of a further selloff in the ruble versus the repercussions of the drastic rate hike in December for the domestic banking system and decided to cut rates,” Bernd Berg, a London-based emerging-market strategist at Societe Generale SA, said by e-mail. “Official reasoning for this rate cut is a stabilization of CPI inflation expectations.”

 

“It looks to me like the wrong timing in easing monetary policy, as geopolitics remains a negative driver,” Luis Costa, the chief strategist for eastern Europe, the Middle East and Africa at Citigroup Inc. in London, said by e-mail.

The good news is that with the month of January effectively over, it will be a stretch to get any more central bank surprises in the remaining hours of the month. In February, however, expect even more capitulations from central banks around the globe as the relentless rise in the USD wreaks havoc to the global monetary system.

 

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Fri, 01/30/2015 - 07:41 | 5724177 MarketAnarchist
MarketAnarchist's picture

"Thirty minutes later, the Kremlin announced the ruble was now convertable to gold, the collapse of the western world is expected in minutes....."

Fri, 01/30/2015 - 07:48 | 5724180 GetZeeGold
GetZeeGold's picture

 

 

OK.....so we have some time.

 

Throw some cheap gold at them.....they'll never expect that. Especially since we just stole a boatload from them.

 

Victory is immenent....

Fri, 01/30/2015 - 08:10 | 5724226 negative rates
negative rates's picture

I admit it, it was the pressure.

Fri, 01/30/2015 - 08:13 | 5724229 Haus-Targaryen
Haus-Targaryen's picture

Tyler - 

Shitty editing is shitty.  "Europe" isn't a country.  

(Come at me Ghordo) 

Fri, 01/30/2015 - 08:20 | 5724240 Thorlyx
Thorlyx's picture

He meant ECB. Probably....

Fri, 01/30/2015 - 08:29 | 5724255 Latina Lover
Latina Lover's picture

I'll bet the decision by the new Greece government not to increase sanctions, but merely to extend them helped, along with Oil getting closer to a bottom.

Fri, 01/30/2015 - 08:21 | 5724241 PartysOver
PartysOver's picture

Did Greece play a role in this? After all they blocked or are considering blocking any new EU sanctions against Russia. Could the reversal or blocking of those sanctions have more impact then the price of crude?

Things be get'n innerest'n. Next move?

Fri, 01/30/2015 - 08:25 | 5724247 Thorlyx
Thorlyx's picture

Greece dumps Euro, adopt Rouble as new currency. A week later Cyprus follows.

Fri, 01/30/2015 - 07:52 | 5724196 Burt Gummer
Burt Gummer's picture

Let's stop fucking about shall we and collectively cut rates around the world to negative -1000%

FREE MONEY FOREVER!!!!!!!!!

https://www.youtube.com/watch?v=yloaBw80fV4

Fri, 01/30/2015 - 07:51 | 5724197 Burt Gummer
Burt Gummer's picture

Oh look the ruble is crashing.

Fri, 01/30/2015 - 09:04 | 5724331 5e0V2a3
5e0V2a3's picture

"Thirty minutes later, Russia's central bank announced another interest rate increase - back to 17%"

Those Russians are crazy like a fox!!   :-)

Fri, 01/30/2015 - 07:47 | 5724190 Romney Wordsworth
Romney Wordsworth's picture

BREAKING NEWS: The CENTRAL BANK of Romney Wordsworth hereby announces a rate cut [on a tube of ASE's today at the LCS]

Fri, 01/30/2015 - 08:10 | 5724227 Arius
Arius's picture

the currency Ww ?  i guess if we all agree to use it is okay in my book ....

Fri, 01/30/2015 - 07:51 | 5724193 29.5 hours
29.5 hours's picture

 

 

To lower rates dramatically so soon after raising them just as dramatically indicates indecision or desperation at the top of ruling circles. This is a sign of worse to come.  The U.S. has increased its encirclement and aggressive moves. If the Russian leadership indicates weakness, then the chances for miscalculation on someone's part increases.

 

Fri, 01/30/2015 - 07:52 | 5724199 Burt Gummer
Burt Gummer's picture

Which than leads to war.

Fri, 01/30/2015 - 07:56 | 5724206 29.5 hours
29.5 hours's picture

 

 

Yes. Economic and political war can transform into the real thing, despite everyone's intentions, very quickly.

The most worrisome factor is the sheer aggressiveness of U.S. policy. They act as if war can be something of little consequence.

 

 

Fri, 01/30/2015 - 08:58 | 5724312 X86BSD
X86BSD's picture

The agressiveness to me is shockingly identical to that of a rabid dog that is cornered and scared. It's lashing out at anyone that gets to close. It doesn't matter who it is.

I think someone needs to call animal control. 

Fri, 01/30/2015 - 08:09 | 5724212 GetZeeGold
GetZeeGold's picture

 

 

Which than leads to war.

 

Pace yourself Amigo....a whole lot of crap has to happen before we get to that.

 

Hopefully the Taliban Freedom FightersTM will help us out. Can you say Libyan gold?

 

"The sportos and motor heads, geeks, sluts, bloods, wastoids, dweebies, dickheads, the president of the united states...they all adore the Taliban. They think they're righteous dudes."

Fri, 01/30/2015 - 08:40 | 5724277 Fix-ItSilly
Fix-ItSilly's picture

So Switzerland has governing troubles too? Denmark?

Fri, 01/30/2015 - 09:06 | 5724336 5e0V2a3
5e0V2a3's picture

Reversing one's recent decisions - at least from the Zero Hedger's point of view - is a sign of supreme competence!

Fri, 01/30/2015 - 07:56 | 5724204 Johnny Fiat and...
Johnny Fiat and The Contangos's picture

Any way you want to drive the dollar and keep me stacking, it's all good...

Fri, 01/30/2015 - 09:06 | 5724339 5e0V2a3
5e0V2a3's picture

Keep Stackin', Bitchez!

Fri, 01/30/2015 - 07:59 | 5724207 nmewn
nmewn's picture

Meanwhile, the War on Women rages on ;-)

"The job of getting at the truth has never been more difficult. Facets of federal government have isolated themselves from the public they serve. They covet and withhold public information that we as citizens own. They bully and threaten access of journalists who do their jobs, news organizations that publish stories they don't like and whistleblowers who dare to tell the truth," Attkisson said. "When I reported on factual contradictions in the Administration's accounts regarding Fast and Furious, pushback included a frenzied campaign with White House officials trying to chill the reporting by calling and emailing my superiors and colleagues, using surrogate bloggers to advance false claims, one White House official got so mad he angrily cussed me out. The Justice Department used its authority with building security to handpick reports allowed to attend a Fast and Furious briefing, refusing to clear me into the public Justice Department building."

"Let me emphasize that my reporting was factually indisputable, government officials weren't angry because I was doing my job poorly, they were panicked because I was doing my job well," she added."

http://townhall.com/tipsheet/katiepavlich/2015/01/29/sharyl-attkisson-details-government-intimidation-to-congress-n1950097

Fri, 01/30/2015 - 08:10 | 5724215 GetZeeGold
GetZeeGold's picture

 

 

Meanwhile, the War on Women rages on ;-)

 

Heh heh......uh huh.

 

That.....and deflated footballs.

Fri, 01/30/2015 - 08:26 | 5724249 Jayda1850
Jayda1850's picture

Read this article this morning and laughed my ass off. DOJ is saying Attkisson delete key was simply stuck. You really can't make this shit up.

http://thehill.com/policy/technology/231225-doj-watchdog-ex-cbs-reporter...

Fri, 01/30/2015 - 08:37 | 5724266 GetZeeGold
GetZeeGold's picture

 

 

Well she does drink a lot of sodapop.....just sayin.

 

That stuff is hell on keyboards.

Fri, 01/30/2015 - 08:51 | 5724298 cheech_wizard
cheech_wizard's picture

The stuck bakspace key.... Yup... Totally believable.

 

Fri, 01/30/2015 - 09:40 | 5724499 freakscene
freakscene's picture

the gullible grubers actually believed ISIS hacked the pentagon too

so why not blame the backspace key?

Fri, 01/30/2015 - 08:29 | 5724254 The Shape
The Shape's picture

And Australia is coming next week because there just isn't enough debt in Australia.

Fri, 01/30/2015 - 08:39 | 5724275 Fix-ItSilly
Fix-ItSilly's picture

So Switzerland has governing troubles too? Denmark?

Fri, 01/30/2015 - 09:02 | 5724329 5e0V2a3
5e0V2a3's picture

Russia raises its rate (twice), then cuts it...expect another rate increase soon (and then another cut).

Russia disbands into 15 separate sovereigns, then one-by-one tries to reconstitute itself as a single sovereign again.

Yes folks, "Russia is playing the long game of chess."

Fri, 01/30/2015 - 09:16 | 5724364 TheFourthStooge-ing
TheFourthStooge-ing's picture

Gadzooks, what a fuckhead this guy is.

Seems like the type that avoided playing in sandboxes as a child because cats kept trying to cover him with sand.

Fri, 01/30/2015 - 09:49 | 5724538 5e0V2a3
5e0V2a3's picture

Bob, are ad hominem attacks all you have in your arsenal?

Witless!   :-)

Fri, 01/30/2015 - 10:33 | 5724789 TheFourthStooge-ing
TheFourthStooge-ing's picture

It's more than your repetitious drivel deserves, Amerikan Parrotidiot.

Go on, go ahead and post that hilarious knee-slapper about who is on Putin's suicide watch. It's truly the best you've got. It's just as funny the fifth time you post it in a day as it was the first time.

Success. Not failure. Success. US citizen style.

Fri, 01/30/2015 - 09:12 | 5724350 5e0V2a3
5e0V2a3's picture

Whoops...the ruble's at 70 to the dollar.

That wily Vlad and Elvira - I knew they'd canoodle and canoodle and come up with something beautiful.

It's all part of the master Russian plan - keep stackin, bitchez!  Vlad and some provincial governor are going to announce a new gold standard based on the crumbling ruble, head off to banya, then recant completely (if a bit incoherently) in the buff.

 

Fri, 01/30/2015 - 09:16 | 5724368 HowdyDoody
HowdyDoody's picture

Empirically, the half life of the effect of sanction increases seems to be 1 day. What is the half life of the effect of interest rate changes?

Fri, 01/30/2015 - 09:21 | 5724385 YouSerious
YouSerious's picture

Lol how much trouble is Russia in? seriously i would get out of that country and change my accent as soon as possible. 

Fri, 01/30/2015 - 09:51 | 5724558 5e0V2a3
5e0V2a3's picture

It's too late for most Zero Hedgers.  They've already got their tickets and Russian for Dummies volumes and are headed for Sheremetyevo Airport, where Vlad's going to judo-flip them to the mat in a display of masculinity.

Where are y'all meeting up in Moscow, Zeroes?

Fri, 01/30/2015 - 09:25 | 5724419 IndianaJohn
IndianaJohn's picture

And did you see those creatures from the central bank? http://johnhelmer.net/?p=12417

Fri, 01/30/2015 - 10:30 | 5724784 gcjohns1971
gcjohns1971's picture

"administration to lower rates which have led to the Russian economy and banking sector grinding to a near halt. "

 

If Russia cannot stomach higher interest rates and requires Central Bank intervention for lower rates, how will they ever be able to have a real Gold standard where CB rate intervention will result in a draining of the gold reserve?

The same conditions that result in a falling Fiat Ruble would result in the gold being drained from a Gold Ruble.

Seriously, how can anyone anticipate a Gold standard there if the nation cannot resist the temptation to tamper with rates?   Isn't that the whole POINT of a Gold standard?  To inhibit politician's ability to manipulate the currency????

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