Vladimir Putin. Photo: Getty Images
The Russian economy is showing signs of overheating, causing a worryingly high inflation rate.
Source: Kremlin leader Vladimir Putin during a press conference; Reuters
Details: Speaking to citizens in his annual live broadcast, Putin supported the Russian Central Bank’s tight monetary policy but noted that the regulator could act more timely.
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The central bank is expected to raise its key policy rate by 200 basis points to 23% at the next meeting on Friday. This is the highest level in over 20 years, and businesses have strongly criticised such a tight monetary policy.
Quote from Putin: “There are some issues here, namely inflation, a certain overheating of the economy, and the government and the central bank are already tasked with bringing the tempo down.”
More details: The Kremlin leader also said that before the broadcast, he had spoken to Russian Central Bank Governor Elvira Nabiullina, who warned that inflation in 2024 would reach 9.2-9.3%, which is significantly higher than the central bank’s forecast of 8.5%.
Putin added that due to tight monetary policy and government measures to cool the economy, economic growth in 2025 will go down compared to this year’s 4%.
Quote from Putin: “I think the (growth rate) next year should be somewhere around 2-2.5%, a sort of soft landing in order to maintain macroeconomic indicators.”
Background:
- Ukraine’s economy remains a quarter smaller than in 2021, but for the first time since the start of the Russian full-scale invasion of Ukraine in 2022, it is outperforming the Russian economy in several key respects.
- Elvira Nabiullina is facing harsh criticism from the political and business elite over record high interest rates.
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