Bank of Russia: yet another hike

believe the regulator will keep tightening monetary policy, bringing the key rate to at least 5.25-5.5% by the end of the year.

The bank is likely to hike the key rate by 25bps at the next meeting on June 11. Our base case scenario suggests that OFZ 10Y yields would reach 6.7-6.8% per annum by the end of December 2021 (now around 7% per annum).The OFZ market gained a strong positive impulse last week after the Russian troops pulled back from Crimea and the border regions of Ukraine after drills to their permanent bases.