What I Learned This Week

Russia’s stock market breakout and surge continues. “A new era of growth-supportive policies has begun.”

So said Elina Ribakova, deputy chief economist at the Institute of International Finance (IIF). Late last month, Russia’s central bank surprised markets with a 50 basis-point rate cut, which drove Russian sovereign bond yields to their lowest levels since early-2008 (see first chart below). This, in turn, will bolster Moscow’s borrowing capacity to help fund its ambitious $400 billion (25.7 trillion rubles) of domestic-spending programs, which are illustrated in the second chart below. (See WILTW May 9, 2019.) Source: Bloomberg Source: IMF Although Russia’s central bank cut its policy rate from 7% to 6.5% at last month’s meeting, real interest rat…

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