RS: NBS on hold amid elevated global uncertainty

NBS met our, and Bloomberg consensus expectations, keeping its key rate unchanged at 5.75% at its April meeting. The Central bank outlined that while inflation remains on a downward path, uncertain global environment could negatively affect global financial and commodity markets and thus lead to higher inflation down the road. Mentioned uncertainty could also delay further Fed easing.

Todays NBS decision was expected and logical. If inflation develops according to forecasts, it will make sense to ease monetary policy later this year, but pinpointing the exact timing is exceedingly difficult in the current hectic global surrounding. Our base case is NBS will deliver the first cut in July, as we expect inflation under 4% y/y by then. However, given turbulent but global and local developments, we expect the central bank will remain cautious, delivering only two cuts this year in total.