The MOEX stock index of Russia has exhibited a modest recovery, approaching the 2800 level in early October, although it lingers near the 18-month low of 2600 reached last month. This rebound occurs against the backdrop of persistently tight monetary conditions. In its Stember meeting, the Bank of Russia raised the key interest rate by 100 basis points to 19%, signaling a potential further increase in October. Policymakers have also revised their inflation forecast for the year to a range of 6.5% to 7%, while current inflation stands at 9.1%. This uptick in inflation is attributed to economic strains caused by heightened government military spending, which has escalated wages but challenged the economy's ability to meet rising demand. Central Bank Governor Elvira Nabiullina has cautioned about the looming threat of stagflation, marked by enduring inflation coupled with slowing economic expansion.
As of early 2024, the Russia Stock Market Index has declined 333 points, or 10.75%, since the start of the year based on the trading activity of the contract for difference (CFD) that parallels this benchmark index. Projections indicate that the MOEX CFD is anticipated to trade at 2742.39 points by the close of this quarter, according to global macro models and analyst expectations. Looking ahead, estimates suggest the potential to settle at 2524.76 points in twelve months.