“source of the weakening of the ruble…is soft monetary policy.”: Putin Chief Economic Adviser

From Bloomberg:

Writing in a rare column published by state news agency Itar-Tass, President Vladimir Putin’s chief economic adviser said “the source of the weakening of the ruble and the acceleration of inflation is soft monetary policy.” Russia needs a strong ruble, and policymakers have the necessary tools to normalize the currency value in the near future, he said.

Here’re two pictures of the ruble’s exchange rate (up is depreciation against USD), over five years, over the last week.

Note that the current value reflects the CBR decision to stop purchasing foreign currency. A decision is imminent on the policy rate, tomorrow 10:30am local time. The current discount rate is 8.5%. My reading of consensus of Western economists is something like 10% is necessary by year’s end to stabilize the ruble (while then hammering the economy; see this post for graphical interpretation of the Russian situation in IS-LM-BP=0).

Note this is all taking place against a backdrop of intense capital controls. In that context, the deteriorating trade balance take’s a driver’s role.


23 thoughts on ““source of the weakening of the ruble…is soft monetary policy.”: Putin Chief Economic Adviser

  1. pgl

    So this adviser knowing Putin is running military Keynesian and is worried that low interest rates is leading to a currency devaluation decides Russia needs their own Paul Volcker. And I was complaining about how the FED raised our interest rates.

  2. Macroduck

    The trilemma is at work, as it must be. Each adjustment of the three factors brings its own costs and benefits. Policy aims to balance costs and benefits. The question in the case of Russia, right now, is whose costs and benefits are to be served? Who decides what balance is to be struck?

    The fluctuations in the ruble in recent weeks suggest either a reassessment of earlier decisions, or an error in execution. Quite likely both.

    1. Macroduck

      By the way, in response to Menzie posting about Russian GDP and the welfare result of diverting output to war fighting, Johnny crowed about Russian real wages. Johnny either doesn’t know or doesn’t care about the implication of a falling ruble for Russians’ real income and welfare. Johnny also did’t bother to take into account the welfare loss from military conscription or flight from conscription…or death on the battlefield.

      Johnny – King of desperately biased arguments.

      1. pgl

        Jonny boy focused on real wage growth over a very short period of time. Positive for Russia, negative for Germany. Of course his own link shows real wage growth going back to the late 1990’s. Jonny boy does not want us to see that naturally.

        BTW – take a guess. Who has higher real wages right now … Germany v. Russia? If you answered the latter – then you’d be on par with Jonny boy for Dumbest Troll Ever.

      2. JohnH

        Of course, it never occurred to Ducky the welfare result of diverting output to “defense” in the United States, particularly since a lot of the world’s most expensive military spends a lot on waste, fraud, and mismanagement, which can’t even be identified since the Pentagon can’t even pass an audit!

        As someone noted: Biden asks for another $28 Billion while Maui burns.

        But you’ll never catch Ducky or pgly criticizing US “defense” spending no matter how badly it’s spent and no matter much the opportunity cost. They only criticize Russia (true propagandists!)

        1. Macroduck

          Liar. You don’t know and obviously don’t care what my views on U.S. military spending are. You’ll say anything, no matter how untethered fron the trut.

          1. JohnH

            What is obvious is that Ducky and pgly love to criticize Russia’s military Keynesianism…but curiously remain silent on the US’ own massive “defense” budget. Apparently they are not at all opposed to massive, wasteful “defense” spending…but they are more than happy to parrot propaganda that criticizes defense budgets of the US bogeymen du jour.

          2. pgl

            August 16, 2023 at 4:56 am

            Jonny boy just made your point. I love it when a troll keeps trolling.

        2. pgl

          WTF? You had to change the discussion as you can’t defense your stupid BS on real wages? Some old Jonny boy.

          1. JohnH

            pgl just hates inconvenient facts. And the fact is that Russian real wages have been rising rapidly lately.

            pgl only likes statistics that parrot US propaganda that shows that the Russian economy is imploding and that the US’ pointless and futile economic war is actually on track to eventually accomplish something or other (goals TBD.)

          2. pgl

            “the fact is that Russian real wages have been rising rapidly lately.”

            LATELY! Whoopie! And UK real wages rose in 2014. After falling by 10% the years before. Come on Jonny boy – we are know you are the dumbest troll ever. And you keep proving it every day.

        3. pgl

          Can you be more insulting to the residents of Maui? Hey moron – FEMA is there. And Biden is not going to treat them the way Trump treated Puerto Ricans after Maria.

          Look – we know you do not give a damn about Ukrainians. But FYI the residents of Maui are American citizens. So take your partisan garbage and eff off.

    1. Bruce Hall

      As my old Iranian neighbor used to say, “It will be spensee” (expensive) for the state and people of Montana to translate that ruling into an environmentally “beneficial” equation. But, hey, these young people plan to spend the rest of their lives in Montana dealing with the consequences, so go for it.

          1. Moses Herzog

            Do you know what is the most contributing factor in deaths in roadway vehicles?? High speeds. You wanna turn it down to 55?? If they actually enforce the law (police don’t enforce the laws on the books now much less follow them themselves, I see police do roadway violations all the time where I live, and not while on their way to a call)~~55 mph gets my vote.

            I drove semi, and I’ve seen many bloody accidents and fires from uptop of the height of the semi driver’s seat. Blood literally smeared on the hoods of cars and the highway. Heat from cars engorged in fire on the shoulder, I could feel that heat coming through the closed window of the semi as I drive by at not such a slow pace. If people hadn’t cared about “saving” 4 minutes time, they and their families may have seen 30+ more years of their life that had just ended. But don’t ask me twice…… because if I stop and think about how dumb the average MAGA voter is, and how it’s probably mostly MAGA apes that are dying in what is sometimes referred to as “expedited evolution” you may get me to join your team that thinks saving 4 minutes is worth killing your entire family in what is often a painful death.

      1. pgl

        So your old Iranian buddy is dumber than CoRev? This is the best you got? Come on dude – JohnH is far ahead of you for dumbest troll of 2023. Get busy.

      2. Macroduck

        How very clever of you to employ “irony quotes” around the word “beneficial”. makes your argument soooo much stronger.

        You pretend to know the plaintiffs plans, but you don’t. You pretend to know the relative costs and benefits of the court’s ruling, but you don’t. Brucey, you have outdone yourself.

  3. Gridlock

    Russia bumped it’s interest rate 3.5 points to 12%. Ouch. But that may strengthen the ruble for a while.

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