Russia: a brief market watch

RUSSIA ECONOMICS - In Brief 19 Feb 2026 by Evgeny Gavrilenkov

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The CBR caught the market off guard. Most investors expected that the early-year inflation spike would push the regulator to stay cautious and leave rates unchanged in February. Instead, the CBR cut the rate by 50 bps to 15.5%, made dovish remarks, and expressed growing confidence in future cuts. The market took this as a sign of at least one more cut in March, which sent OFZ yields lower — the 10-year paper dropped over 40 bps in just four trading days. On top of that, Minfin sold R328 bln in bonds in a single auction, marking the best result for fixed-rate papers since 2021. It seems likely the government will take advantage of the current environment to boost issuance amid weak oil-and-gas revenues, which could keep the OFZ yield curve from narrowing further. While the bond market is showing strong optimism, equity investors seem less enthusiastic. The stock index has risen by 1.8% since last Thursday, but ongoing geopolitical tensions are keeping investors from boosting their stakes in local shares. Many expect a new round of sanctions soon, which could further hurt the national economy. Still, if interest rates in Russia keep falling, demand in the stock market might pick up. We anticipate the key rate could go to 12% by year-end, potentially making the second half of the year more favorable for equities. For the week ending February 16, weekly inflation eased to 0.12%. MTD and YTD inflation climbed to 0.32% and 1.95%, suggesting the early effects of higher VAT and the December spending spree are wearing off. On top of that, monthly inflation in January, based on a broader consumption basket, appeared lower than cumulative weekly inflation prints published earlier...