Increasing interest rates is not going to work too well. The idea behind it, is to slow down borrowing hence slowing down demand and with that lowering inflation. That just does not work, when the government spends a lot of money on say a war. The other way it works is by attracting international investors due to higher profits. Obviously seizing assets from foreign investors is not helping with that either.
The only way Russia can actually lower inflation and continue the war is by using its foreign currency reserves and buying foreign products to increase supply in the market. In the case of Russia the foreign currency reserves is part of the sovereign wealth fund. So look out for that.
This is true Russia is running out of options, and even if the 3 latest interest rate hikes didn’t do much, I’m still pretty sure they’ll have to do it again.
Every little bit helps as they say.
Increasing interest rates is not going to work too well. The idea behind it, is to slow down borrowing hence slowing down demand and with that lowering inflation. That just does not work, when the government spends a lot of money on say a war. The other way it works is by attracting international investors due to higher profits. Obviously seizing assets from foreign investors is not helping with that either.
The only way Russia can actually lower inflation and continue the war is by using its foreign currency reserves and buying foreign products to increase supply in the market. In the case of Russia the foreign currency reserves is part of the sovereign wealth fund. So look out for that.
This is true Russia is running out of options, and even if the 3 latest interest rate hikes didn’t do much, I’m still pretty sure they’ll have to do it again.
Every little bit helps as they say.
Yep, but it’s also like pissing in the bed to keep you warm 😋, it will strain the growth even more.