Thread by @joni_askola

1/10 If there is one thing that Putin fears, it's inflation: the Central Bank of russia is expected to announce a new interest rate hike tomorrow, as a combination of labor shortages, increased public spending, and sanctions has driven inflation out of control

2/10 On Thursday, the russian rouble experienced a slight decline against the US dollar and china's yuan, just a day before a central bank board meeting where analysts anticipate a hike in the central bank's key interest rate to combat inflation.

3/10 The russian central bank is anticipated to raise the key interest rate to at least 20%, up from the current 19% and 7.5% in June 2023. This indicates the severity of the inflation problem russia faces, as its economy is overheating.

4/10 Inflation in russia is primarily driven by a combination of labor shortage, increased public spending, and sanctions. The longer the war continues, the more these three factors will exacerbate the situation.

5/10 russia's largest bank, Sberbank, recently increased its minimum mortgage rate to 24.9%, while VTB has raised its minimum rate to 27.4%. Both banks are clearly anticipating a rise in the key interest rate.

6/10 “Most enterprises in russia will go bankrupt,” said Chemezov, head of the largest state-owned industrial holding, Rostec. He blames the high interest rate for it.

7/10 Putin has placed his country in a position where its nominal GDP is now lower than it was in 2013, and the economy is experiencing an overheating situation that cannot be reversed without reducing the scale of the war he initiated and is currently losing.

8/10 Despite being fully committed to the point of experiencing an overheating economy and labor shortages, russia is still engaged in a conflict on its own territory, nearly three years into a war it initiated on its own terms.

9/10 russia's economic challenges are just beginning. As time goes on, the country's Soviet-era stockpiles will dwindle, leading to an increase in the costs associated with the war.

10/10 Source:
Reuters - russian industry warns central bank's high rates hurt crucial new investment