Russia’s central bank cut its benchmark interest rate Friday by one percentage point to 17%, a step that could support the economy as growth slows and spending on the war against Ukraine increases the budget deficit.
The bank had raised its key rate as high as 21% to combat inflation, but has begun to retreat amid complaints from business leaders and legislators about their impact on economic activity.
The bank’s inflation warnings in its policy statements underlined the stresses in the Kremlin’s wartime economy.
[…]
The central bank is focused on containing prices. Yet the finance ministry is pumping money into the economy in the form of defense orders and military recruitment bonuses that have fueled growth, wages and inflation over the course of Russia’s 3 1/2 year war against Ukraine.
17%? Isn’t that unbelievably high?
It’s lower than their inflation. They’d need an even higher interest rate in order to curb inflation.
It is.
At the same time, the earlier interest rate of 21 % was considered too low, because a higher rate would have been needed to curb inflation.
Sounds good. Now they have had to choose between rock and a hard place, and chose to let the inflation increase so that companies could at least kind of keep existing in the short term. A sensible decision, but painful, because it means killing the economy in the longer term.
They were able to chose both not to curb inflation, and neither to spur growth.
A win win scenario in my book.
Never interrupt your enemy when they are making a mistake.
Number of Russian firms planning to hire more staff halves in nine months, survey shows
The survey, conducted among over 300 professionals across Russia by job sites Rabota .ru and SberPodbor, both owned by Russia’s largest lender Sberbank, showed that a quarter of respondents were planning to expand headcount from September, down from 56% at the end of last year.
The survey also showed that around 12% of Russian companies were planning layoffs this autumn, up 4 percentage points from the end of last year.
Meanwhile, Russia will borrow more than planned in 2025, finance minister says
Fuck the blyats.
A wartime economy is only profitable if you, y’know, actually gain territory and spoils of war.
Or, you are like one of the 1% in the country selling all the ammunition and gear to the army.
That wouldn’t be the same 1% that has all the political power in the country, would it?
