1/6 Out of control: russia's central bank is projected to increase its key interest rate to 23% later this week. But will this rate hike be sufficient to rein in the rampant inflation driven by the failed invasion of Ukraine?
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2/6 According to a Reuters poll, the russian central bank is anticipated to raise its key interest rate by an additional 200 basis points (bps) to 23% during its final rate-setting meeting of 2024 this week, driven by soaring inflation worsened by a declining rouble.
3/6 russia is in serious trouble as its increased key interest rate has failed to curb inflation, which has surged from 7.5% in June 2023 to 21% now. The central bank's benchmark rate was last at 23% in 2002. Will this be enough?
4/6 Andrei Kostin, CEO of VTB, russia's second-largest bank, suggested that due to high military spending and sanctions, the key interest rate may not be fully effective as a monetary policy tool for managing inflation.
5/6 Putin faces a challenging dilemma as russia's economy overheats, primarily due to labor shortages, increased public spending, and sanctions. The ongoing war exacerbates this issue daily, and the current pace is unsustainable for russia in the long term.
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Reuters - russia's key rate seen climbing by another 200 bps to 23%: Reuters poll