Russia has hiked interest rates to 15pc as policymakers step up their fight against inflation amid labour shortages and a weaker rouble.
The central bank lifted rates by two percentage points from 13pc in September.
OK.
In a statement, Russia’s central bank said: “Current inflationary pressures have significantly increased to a level above the Bank of Russia’s expectations. Steadily rising domestic demand is increasingly exceeding the capabilities to expand the production of goods and the provision of services.”
Yes, OK.
Inflation stood at 6.6pc in the year to October, according to the central bank, up from 6pc in September. The central bank said on Friday that inflation could hit 7.5pc by the end of the year.
That doesn’t look right at all. Real interest rates were already 7% and they still had 6% inflation?
My bet – based upon nothing but a feeling in my waters (OK, rather, economics does add up, if you see this then you should also see that as a result of the same cause etc) is that that inflation rate is grossly under-reported. Just because 6% inflation and 7% real (13% nominal) interest rates aren’t really consistent with each other.
Gosh. Under-reporting inflation rates?
Do you think they could possibly do that here in the west as well? Perish the thought.
“Gosh. Under-reporting inflation rates?
Do you think they could possibly do that here in the west as well? Perish the thought.”
At least uncle Vlad has the decency to set his interest rates to the actual inflation rate (if one assumes its considerably higher than the published rate), whereas our lot fiddle the inflation figures and then set the rate as if it was true……..
You’re saying that a 7% real interest rate is not realistic?
Can we send the Governor of the Bank of England on a fact finding trip to the highest open window in Moscow?
Increased consumer demand? Isn’t that usually touted as an indicator of a consumer confidence and an vibrant economy?
But I thought Russia had been driven to economic ruin by the brilliant machinations of Western Governments whose economies are… what is the opposite to vibrant? In fact Western Governments have done a far better job or ruining their own economies than Russia’s – and managed to lose the proxy war.
Mebbe the high real rate is to attract cash to sovereign debt issuance.
I remember in the 1980s being told how solid the USSR was.
Now I’m being told how solid Russia is.
Not buying. If you look even remotely critically you can see all the same signs.
It’s a mafia vampire state, and the blood is running out.