OREANDA-NEWS. June 25, 2009 CBR issued a report on M2 money supply for May. According to the Russian Bank, as of 1 June 2009, M2 (national definition) stood at RUB12,861.7bn, rising 4.2% from last month, reported the press-centre of OTKRITIE FC.

To put the figures in proper context, M2 stood at RUB13,724.5 at the beginning of June 2008. Thus, the economic downturn has witnessed a sharp contraction in the Russian money supply.

View: The monetary squeeze makes it extremely difficult for the economy to embark on the path to recovery. Consequently, we view May’s growth in the money supply as very positive. We are hopeful that CBR will continue cutting interest rates more aggressively and loosen monetary policy, and that the government will likewise ease its budget policy.