The yield on the Russian 10-year OFZ continues to hover between 15% and 16%, approaching levels not seen in over two and a half years. Traders are closely examining the country’s economic and monetary projections. In its recent Stember meeting, the Bank of Russia raised its key interest rate by 100 basis points to 19%, indicating a potential further increase in October. Additionally, policymakers adjusted their inflation forecast for the year to 6.5% to 7%, while current inflation stands at 9.1%. This inflation surge is significantly influenced by the economic pressures stemming from heightened government military spending, which has led to increased wages that outstrip the economy’s ability to meet demand.
Central Bank Governor Elvira Nabiullina has recently issued a warning regarding the looming threat of stagflation, characterized by persistent inflation and a slowdown in economic growth. As of October 4, the yield on the Russian 10-Year Government Bond was recorded at 16.13% according to over-the-counter interbank yield quotes.
Looking ahead, forecasts suggest that this bond yield will likely trade at around 15.64% by the end of the current quarter, with projections extending to a yield of 15.03% in the next twelve months, as indicated by global macroeconomic models and analyst expectations.