Sanctions are finally in effect: what is happening to the Russian economy now

Sanctions are finally in effect: what is happening now with the Russian economy Angela Figin

A year ago, the Russian Central Bank began a policy of sharply increasing the key rate. He promised to defeat inflation within a few months, and from the second half of 2024 there was supposed to be a sharp decline in the rate. However, now the situation is the opposite.

Inflationary processes are accelerating. About this 24 Channel said former Russian Energy Minister, oppositionist Vladimir Milov, noting that there is a high probability that the central bank at the key rate meeting may send a strong signal that there will not be available loans for long.

Why they can’t lower the key rate in Russia

Russians are explained that the supposed pause in the availability of loans is temporary. However, the fight against inflation is dragging on and there is no end in sight. The Central Bank promises to suppress the protracted increase in the general price level with a brutal monetary credit policy, then supposedly rates will go down and loans for business will become available.

Over the year, the situation is reversed. The data that came in for the first 8 days of July show that Russia has record monthly inflation, although the month has only just begun. The Kremlin has no way out of the situation – it's a dead end, Milov noted.

Business insists that such a high rate kills any economic activity. At the same time, the head of the Central Bank of Russia Elvira Nabiullina says that if the rate is lowered now, it will be even worse, because this is an additional inflationary impulse and then banks will stop issuing long-term loans altogether, because no one understands what inflation will be in a couple of years.

< p > “Finally, all the consequences of the sanctions are starting to have an effect,” said the former Minister of Energy of Russia.

< h2 class = "news-subtitle cke-markup" > Why the oligarchs will put pressure on the Central Bank of Russia

< p > According to Milov, raising rates actually has little effect.

< p class = "bloquote cke-markup" > When the Central Bank began to deal with this issue a year ago, I asked what inflationary factors reduces the rate hike, – Milov said.

This game makes no sense, because the main thing that accelerates inflation is the wild injection of budget money into the military industry, the shortage of personnel due to the war, mobilization and mass migration from Russia. Also, in the aggressor country, everything is starting to get more expensive due to the restructuring of trade to Asia.

There are no factors that can suddenly help the central bank, – added the former Russian Minister of Energy.

In his opinion, most likely, the central bank will continue to raise the rate, but this will not reduce inflation. At the same time, oligarchs and lobbyists will begin to put pressure on Vladimir Putin to change the central bank's policy and begin to lower the rate, because due to the lack of available loans it is impossible to do business.