Given the trend in the weekly CPI releases, inflation is likely to pick up above 3% YoY in August, from 2.5% yoy in July, remaining below the CBR’s 4% inflation target notwithstanding the depreciation of the currency earlier in the year. The small jump in August is largely due to unfavourable base effects rather than a change of conditions. Economic activity continues to expand around 1.5% on average – with the latest data a bit more optimistic, but remaining within the range of the last few quarters. The CBR has entered a pause for monetary policy after the renewed sanctions threats from the US. We think this pause will not be much longer than a couple of quarters, since even if RUB weakens significantly in the coming six months as a result of the new sanctions, the only effective way Russia will have to stabilise the country is to lower interest rates and maintain a modest fiscal stance (not as expansionary as recently announced, but not too tight despite the potential drop in activity).