The UK Ministry of Defense decided to analyze the state of the Russian economy against the backdrop of ambiguous decisions by the Central Bank of the Russian Federation.
Points of attention
- The decision of the Central Bank of the Russian Federation to maintain the key rate at 21% may lead to increased inflationary pressure.
- The fall of the ruble after the announcement of sanctions against Gazprombank indicates a prolonged overheating of the Russian economy.
The Russian economy cannot withstand the pressure of Putin's war
British intelligence officers draw attention to the fact that during a meeting on December 20, the Central Bank of the Russian Federation decided to maintain the key rate at 21%.
What is also important to understand is that at the previous meeting in October, he raised it from 19% to 21% — the highest figure since the beginning of Russia's full-scale invasion of Ukraine.
Against this backdrop, Russian business has begun to actively criticize high interest rates. However, inflationary pressures are likely to be increasing, partly due to the recent depreciation of the ruble.
In November 2024, the ruble depreciated to its lowest rate against the US dollar since the invasion of Ukraine in 2020 (to 114 per US dollar), the UK Ministry of Defense reminds.
What is really happening?
According to British intelligence officials, they link the fall of the ruble to the announcement of sanctions against Gazprombank.
As is known, after this, economic statistics were released, indicating the ongoing overheating of the Russian economy.
In response, the Central Bank of the Russian Federation announced the cessation of foreign currency purchases by 2025.
Despite this, as is known, the ruble exchange rate remained around 100 to the dollar until December 20, 2024, which led to widespread market expectations for another increase in the key rate.
The decision of the Central Bank of the Russian Federation to keep interest rates at the current level will most likely exacerbate imbalances in the economy due to the inflationary effects of the depreciation of the ruble, labor shortages, and high government spending.
