Connect with us

Latest

News

Staff Picks

Russia’s inflation rate continues its plunge

Despite expected plunge in inflation to 5.5% by year end Russian Central Bank refuses to cut interest rates.

Alexander Mercouris

Published

on

899 Views

As the US Federal Reserve Board raises interest rates and the European Central Bank starts to taper off its quantitative easing programme, the Russian Central Bank is maintaining its tough monetary policies.

As I predicted, fears that inflation would rise significantly in Russia in December in the run up to the New Year holiday have been proved wrong.  Weekly inflation remains stuck at 0.1 percent.  Annualised inflation has now fallen to 5.6 percent from 5.8 percent at the end of November, and the Central Bank is now predicting that inflation for the whole year will be between 5.5 percent and 5.6 percent.

As I have pointed out previously, this is a post-Soviet record.  In fact it is better than this since inflation in the last years of the USSR was certainly running above 5 percent though the fact was masked by fixed prices (it expressed itself instead in empty shelves in the shops).

Notwithstanding this fall in inflation the Central Bank chose at its latest meeting in December to keep its main interest rate at 10 percent.

This means that real interest rates in Russia are continuing to rise, and are now over 4 percent.

Whilst there is certain to be an interest rate cut at the next Central Bank meeting in late January, all the indications are that this will be small, and that real interest rates in Russia will remain very high.

What is striking is that the Central Bank is maintaining its tight monetary policies despite the continued fall in inflation, and the continued failure of the worst case scenarios it regularly prophecies to come to pass.

The US Federal Reserve Board’s decision to raise interest rates has had none of the dramatic impact on international markets that its previous increase did last year.  Oil prices in particular have failed to drop despite the widespread doubts about whether the recent agreement between OPEC and Russia to cut oil production will hold.  This fact points more than any other indicator to the probability that the fall in oil prices which began in the summer of 2014 has now run its course.

With oil prices apparently stabilising at around $50 a barrel against the Russian Central Bank’s prediction that they would fall to $40 a barrel, concerns about the Russian budget – which were always wildly overstated – are dissipating.

Importantly the exchange rate of the rouble seems to be becoming increasingly stable, with the rouble brushing off the effect of US Federal Reserve Board’s rate increase.  Instead of money leaving Russia to benefit from the US rate increase and the expected rise in the value of the dollar, it has been pouring into Russia instead, as international investors seek to benefit from the high interest rates there and look forward to the Trump administration’s lifting of sanctions.

As it happens the flood of money into Russia is by no means unalloyed good news, with much of it ‘hot money’ that might leave as quickly as it comes, and with the flood of money risking a rise in the rouble’s exchange rate, which could cut the economy’s competitiveness.  The Central Bank is already seeking to allay concerns about this, which is a sure sign it is concerned.  However the problem is still very much in its early stages, and there is no sense for the moment that it is out of control.

What is perhaps most surprising is that despite these exceptionally high real interest rates, Russia’s recovery remains on track.  Output in all the economy’s productive sectors is now growing, in the farm sector dynamically so, with only continued falls in the retail sector (the result of still declining real incomes) holding the economy back.

The economy’s ability to grow despite sky high real interest rates that would crush most other economies is a tribute to the Russian economy’s resilience and its very low level of debt.

It also ensures, as the economic recovery slowly gathers pace, that pressure for any change in economic direction will fall on increasingly deaf ears inside the government.

Liked it? Take a second to support The Duran on Patreon!
Advertisement
Click to comment

Leave a Reply

avatar
  Subscribe  
Notify of

Latest

Trump’s speech in Miami plays up anti-socialism, as Bolton focuses on Venezuela regime change (Video)

The Duran – News in Review – Episode 180.

Alex Christoforou

Published

on

The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss Trump’s recent speech in Miami, Florida, where the US President condemned Venezuela’s socialist government and called on military command within the Latin American country to defect over to the Juan Guaido camp.

Venezuela’a elected president Maduro dismissed Trump’s remarks as an “almost Nazi-style” speech.

Remember to Please Subscribe to The Duran’s YouTube Channel.

Follow The Duran Audio Podcast on Soundcloud.

Via Washington Times

Venezuela’s embattled president, Nicolas Maduro, is rejecting President Donald Trump’s call for a new day in Venezuela and comparing the tone of the American president’s speech in Miami to that of a Nazi.

Trump said Monday that the U.S. stands behind opposition leader Juan Guaido and condemns Maduro and his government’s socialist policies. Trump pleaded with Venezuela’s military to support Guaido and warned of dire consequences for standing with Maduro.

Maduro responded to Trump in comments broadcast on state television. He accused the U.S. president of speaking in an “almost Nazi-style” and lashed out at Trump for thinking he can deliver orders to Venezuela’s military.

Maduro said, “Who is the commander of the armed forces, Donald Trump from Miami?” and added, “They think they’re the owners of the country.”

Liked it? Take a second to support The Duran on Patreon!
Continue Reading

Latest

First Venezuela, now Nicaragua? Bolton says Ortega’s days ‘numbered’ & people ‘will soon be free’

The Central American nation has been rocked by unrest since April last year, with protesters demanding the resignation of Sandinista party leader Ortega.

RT

Published

on

By

Via RT…


US President Donald Trump’s top foreign policy advisor John Bolton appears dead set on resuming his decades-long stand-off with Nicaragua President Daniel Ortega, hinting that Washington-backed regime change may be in the offing.

“The Ortega regime has sentenced three farm leaders to 550 years in prison for their roles in protests in 2018, where Ortega’s police forces reportedly killed 300 activists. As President Trump said Monday, Ortega’s days are numbered and the Nicaraguan people will soon be free,” the national security advisor to the US president tweeted on Wednesday.

The leaders of anti-Ortega protests were given jail terms this week, after they were implicated in the deaths of four policemen and a teacher during a shootout last July.

The Central American nation has been rocked by unrest since April last year, with protesters demanding the resignation of Sandinista party leader Ortega, who has been president since 2007, and convincingly won another five-year term in 2016.

The US has repeatedly backed the uprising against the left-wing government, and last November Bolton made a keynote speech calling for the “crumbling” of what he called the “Troika of Tyranny” – Venezuela, Nicaragua, and Cuba – saying the states represented a “a sordid cradle of communism in the Western hemisphere.”

On Monday, Trump name-checked the same three countries, saying their “great potential” would be unlocked with the collapse of socialism. To expedite the process, Congress last year imposed financial measures that would make it difficult for the economically-stricken Nicaragua to obtain international loans, as well as slapping sanctions on top officials in Managua.

Revenge served ice-cold

Bolton’s history with Ortega goes back to the 1980s. Just as now, Ortega was the leader of Nicaragua, first as he spearheaded the revolution in 1979, and when he was elected president in 1985.

The Ronald Reagan administration spent significant financial resources backing the right-wing Contra rebels during the civil war, which lasted nearly the entire decade.

Bolton, at that time a legal specialist, held a number of senior positions in the Reagan White House, and was more than a witness to its shadowy CIA-aided schemes to bypass a Democrat-run Congress ban on helping the opposition militants.

He reportedly played a crucial part in hobbling both the scope of the Iran-Contra investigation and an inquiry into drug- and gun-running militants, who were enabled by Washington.

 

View this post on Instagram

 

We have run out of red ink

A post shared by RT (@rt) on

After he returned to prominence under George W. Bush in yet another chapter of an unsinkable career, Bolton failed to dislodge Venezuela’s Hugo Chavez, the Sandinistas, or Cuba’s Fidel Castro (at one point, he accused Havana of developing biological weapons, without solid evidence). But as a man who with permission from Donald Trump now seems to be steering US foreign policy on dozens of key issues, Bolton has more resources than ever before to settle his lifelong ideological grudges.

Liked it? Take a second to support The Duran on Patreon!
Continue Reading

Latest

Hungary Prime Minister Attacks Juncker and Soros in Billboard Ad

Hungarian Prime Minister Victor Orbán attacked EC President Jean Claude Jucker and George Soros in a billboard ad.

The Duran

Published

on

Via MishTalk:


The EU has never seen anything quite like this. Orbán has a billboard campaign that claims European Commission president Juncker and and George Soros are “Endangering Hungary’s Safety”.

Opening a new front against Brussels a few months before European [parliament] elections, the poster shows the European commission president alongside the Hungarian-American philanthropist George Soros, a familiar target in Hungary.

“You have the right to know what Brussels is planning to do,” the poster says. On its official Facebook page, the Hungarian government says the poster is part of an information campaign to tell the public about Brussels’ migration plans, which it claims “fundamentally endangered Hungary’s safety”.

Although the government has previously run a “Stop Brussels” campaign, the decision to use an image of Junker is an escalation in the Orbán government’s public relations war with the EU’s most senior leaders.

It also exposes the rift in the centre-right European People’s party in the European parliament, which counts Juncker and Orbán, as members.

Orbán was re-elected for a third straight term last April, after a campaign dominated by immigration. A long-term critic of the EU, Orbán has accused NGOs and critical media of being part of a plot orchestrated by Soros to send millions of people to Hungary.

In recent weeks, Orbán has spoken of his hopes that the next European parliament will be dominated by anti-immigration parties.

Birds of a Feather Not

​Juncker once met Orbán with the jokey greeting “hello, dictator” and playfully tapped his face.

Today, Juncker responded Orban Should Leave Europe’s Centre-Right.

European Commission president Jean-Claude Juncker has said Hungarian prime minister Viktor Orban’s ruling Fidesz party should leave the centre-right European People’s Party (EPP) group in the European Parliament (EP).

“Against lies there’s not much you can do,” Juncker was quoted as saying by the Reuters news agency, adding that he had called for Fidesz’s expulsion from the EPP.

​”They didn’t vote for me in the European Parliament,” he said in Stuttgart, Germany, in a speech. “The far right didn’t either. I remember Ms. Le Pen, she said: ‘I’m not voting for you.’ I said: ‘I don’t want your vote.’ There are certain votes you just don’t want,” Juncker said, referring to the French far-right leader Marine Le Pen.

Eurointelligence Comments

Looking at Orbán’s previous record, and noting that one cannot of be sure, we continue doubt that Hungary’s Prime Minister has changed his European strategy and is now working to provoke the exclusion of his party from the EPP. Rather, Orbán seems to be doing one his classic hit-and-runs.

There is little doubt that the new smear campaign will make life on the campaign trail much more difficult for Manfred Weber, the CSU MEP and EPP spitzenkandidat. Juncker himself has now declared more forcefully than ever before that the EPP values are not consistent with keeping Fidesz in.

But we note that the CSU leadership in Munich has in the past consistently worked to maintain close and even warm ties with Orban.

Spitzenkandidat

US readers no doubt need an explanation of Spitzenkandidat. The following video explains.

In short, the term refers to an election process instead of an appointment process to determine the head of the European Commission.

63% of Europeans want the commission president determined by vote. Those in power still support the behind closed doors process for obvious reasons.

Orbán’s mission

Orbán’s mission is to weaken the EU from within. Italy has the same mission, for different reasons, as does President Trump.

EU Splintering

Two days ago I reported a Commerce Study Deems “European Cars a Threat to US National Security”. That’s nonsensical, of course. But Trump’s mission is easy to spot. He is doing his best to bust up the EU.

And now Trump has a lot of help on the inside: Marine Le Pen in France, Victor Orbán in Hungary, and Matteo Salvini in Italy.

I response to Trump, I noted, EU Pokes Trump Again, This Time Over Huawei’ s 5G Technology.

In the UK, Seven UK MPs Split from Labour Party Over Brexit. More MPs joined that parade today.

The splintering of the EU continues with escalating infighting at unprecedented levels.

It is illogical for the UK to want to part of this mess. Yet, the UK Remainers want to stay in.

Mike “Mish” Shedlock

Liked it? Take a second to support The Duran on Patreon!
Continue Reading

JOIN OUR YOUTUBE CHANNEL

Your donations make all the difference. Together we can expose fake news lies and deliver truth.

Amount to donate in USD$:

5 100

Validating payment information...
Waiting for PayPal...
Validating payment information...
Waiting for PayPal...
Advertisement

Advertisement

Quick Donate

The Duran
EURO
DONATE
Donate a quick 10 spot!
Advertisement
Advertisement

Advertisement

The Duran Newsletter

Trending