Russia's inflation plunged to its lowest level in almost 3 years

Russia’s inflation once again fell more than expected.

Headline inflation came in at 6.1% year-over-year for October — the slowest rate since January 2014.

The reading was below the prior month’s reading of 6.4%, and below the Bloomberg consensus forecast of 6.3%.

Still, the larger than expected drop probably isn’t going to spur the Central Bank of Russia to change up its strategy.

“This is unlikely to cause the central bank to change its mind, and interest rates will almost definitely be kept on hold at the MPC meeting in December,” wrote Liza Ermolenko, emerging markets economist at Capital Economics.

“But today’s data do reinforce our view that the easing cycle, when it eventually comes, will be substantial.”

Last week, the bank once again held rates at 10.00%, which did not come as a surprise given that it previously said it was done easing until 2017.

But interestingly, the policy makers also adopted a somewhat pessimistic tone in their accompanying statement, writing that temporary factors (including the “good harvest”) were behind the falling inflation rate.

“Looking ahead, this year’s good harvest should help to bring food inflation down further,” added Ermolenko. “What’s more, the unwinding effects of earlier falls in the ruble, coupled with the disinflationary impact of the large amounts of spare capacity in the economy, mean that non-food price pressures should continue to ease too.”

The Russian ruble is down by 0.3% at 63.7281 per dollar as of 10:48 a.m. ET.

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