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Russia's central bank raises interest rate to 21% to fight inflation boosted by military spending (apnews.com)

submitted 2 months ago by Buffalox@lemmy.world to c/ukraine@sopuli.xyz

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[-] Buffalox@lemmy.world 2 points 2 months ago* (last edited 2 months ago)

Yes the Russian national bank is handling this very well, and that helps prevent hyperinflation.
Technically hyperinflation is 50% monthly inflation for at least 1 month. But there may be other definitions?

But if the Russian government persist in stressing the economy beyond what it can handle, there is a breaking point, where hyperinflation is a possibility, and not even their brilliantly led central bank can prevent it.

Putin is obviously not as smart as we once thought, and he is out of good options. He may not be able to deal with this effectively, maybe not even rationally. He may turn to Hitler strategies, where Hitler moved military forces that didn't exist around on the map. But Putin might do it with the economy too.

There have been indications that Putin is living in a fantasy world, where he thinks he can bend reality by force of will.

[-] luckystarr@feddit.org 4 points 2 months ago

As long as Russia has foreign oil sales they won't need to print as much money, lowering the chance of inflation rising uncontrollably.

[-] Buffalox@lemmy.world 3 points 2 months ago

Absolutely true, the oil is helping Russia a lot. It probably benefit Russia about as much as foreign aid helps Ukraine.
But the oil can only do so much, when the economy is overheating badly.
The problem in Russian economy is not shortage of money, it's lack of production capacity, and lack of workers to increase it. Probably also lack of ability to import goods like they used to. This puts extra pressure on their home production, and helps prevent the Russian economy to keep up with the increased strain from the war.