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20% interest rates. Yes, just raising rates to a high enough level is enough. This is macroeconomic policy 101. It will seriously deflate the Russian economy,
by H8crilA 5y ago
20% interest rates.
Yes, just raising rates to a high enough level is enough. This is macroeconomic policy 101. It will seriously deflate the Russian economy, recent World Bank projections are for a -11% GDP drop (Ukraine: -40% drop). That's a very severe recession. You can always defend a currency at the expense of jobs, it was done in the US too, by Paul Volcker.
- gregwebs 5y agoEven with this internet rate they are experiencing elevated inflation. The ruble may be stable, but these conditions of high interest and capital controls are expected to severely damage the economy if they are maintained.
- H8crilA 5y agoPoint is, if you raise them high enough and keep them there for long enough you can disarm any inflation and any currency depreciation, at the expense of economic throughput. And so that's what they did: https://tradingeconomics.com/russia/interest-rate https://tradingeconomics.com/russia/interest-rate It's macroeconomic policy 101, tested many times throughout history in various countries, both positively (when you do this then inflation/depreciation stops) and negatively (when you don't do this then inflation/depreciation continues). There are many unanswered question in macroeconomics, but this isn't one of them.