The Central Bank of Russia (CBR) kept its interest rates on hold at 7.5% on Friday, as expected by the market. While the tone in the statement and commentaries did soften slightly, the hawkish bias concerning the outlook was largely retained. The CBR faces a significant challenge of a disconnect between the near-term expected high inflation and the low realization of inflation. The bank lowered its inflation expectations for year-end to 4.5-6.5%, a 50 bps decrease from its prior outlook. On the war front, the leader of the Wagner group has signaled that he would pull his forces out of the Bakhmut area if the group does not receive more ammunition from Moscow, in the latest sign of tension between the group and the Russian defense ministry.