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Markets Plunged as Bank of Russia Cut Rates by 0.5%

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Russia cuts rates further on assessment of inflation risks ahead

As widely expected, the Bank of Russia cut interest rates by 50 basis points to 10.5% on June 10 in order to bolster the sluggish growth in the economy. The central bank governor, Elvira Nabiullina, showed confidence that the inflation rate will reach the target of 4% towards the end of 2017. The monetary easing may continue on assessment of inflation risks, as there is still some room to cut rates further. The VanEck Vectors Russia ETF (RSX) and the iShares MSCI Russia Capped ETF (ERUS) continued to trade in the negative trajectory on June 10 as the central bank maintained a dovish stance on further policy changes.

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EWG trades negative as German inflation rises by 0.1%

Consumer prices in Germany rose by 0.1% on an annual basis in May after a drop of 0.1% in April, which met estimated forecasts. On a monthly basis, German CPI figures rose by 0.3% in May against a decline of 0.4% in the previous month. The CPI hit consensus forecasts. Investors were trading on a pessimistic note on Friday as the iShares MSCI Germany ETF (EWG) fell by 3.3%. Eurozone (EZU) markets were trading low on cues from the release.

Turkish markets fall despite GDP exceeding forecasts

The Turkish economy grew by 4.8% in the first quarter, above expectations of a 4.5% increase and the previous month’s growth of 5.7%. The rise in government expenditure and household consumption primarily drove the advancement in GDP (gross domestic product) while sluggish global demand was the downside factor. The iShares MSCI Turkey ETF (TUR) fell by 3.3% on Friday.

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