Russian central bank sharply hikes rates (from 16%) to 18%, promises further tightening
Russian central bank sharply hikes rates (from 16%) to 18%, promises further tightening
10 comments
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This is a clear symptom of what I wrote about already last year. The Russian economy is getting weaker.
The Russian economy was/is overheating, despite it at the same time only has moderate growth.
This is due to the government funneling money out to cover cost of the war with Ukraine. More money than the economy can handle, which then causes inflation.
The increased interest rate is to dampen inflation and an overheating economy the country cannot sustain.As BomOmOm writes, loaning for a house or investing in expanding a business is very expensive, which will slow the activity down in all areas of the economy.
In other words, the current Russian economy is not strong enough to sustain the cost of the war at the current level, and at the same time sustain the population at the current level.Russia is not just losing in Ukraine, they are losing at home too.
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Yes. They even have levers they can pull to make this look better. For example they can reduce the price of tanks and other military equipment, so that they will balance out consumer price increases. But even that's not working any more.
When you already have a declining demographic, you lose 2 million worker to emigration, another half million in a war and then take millions more and put them on front lines and in military factories, of course consumer goods will suffer. Then you lose imports which could cover these goods to sanctions, lose oil refineries to war, and blow up a good portion of your GDP on the front line, of course things will get worse.
You can paper over this in the numbers for some time, even make your GDP look reasonably good with military expenditure, but all that stuff is just getting blown up, not providing investment for future growth. The longer you do it, the worse your future situation will be.
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👍 Exactly.
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Don’t know if you’re writing this from Russia but if you are please keep away from windows. Fascist uncle Poots wont like what he’s reading.
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I'm in EU.
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Fascist uncle Poots has been known to send his orcs into the EU to hassle his detractors. Wipe down any doorknobs before touching them.
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What is this concern trolling lol.
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Thank you for your concern, but Russian intelligence is probably not very concerned about this. They will just block it in Russia so Russians can't see it.
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10 comments