Why the Central Bank's Tight Monetary Policy Cannot Contain Inflation

At its recent, last meeting this year, the Central Bank of the Russian Federation decided not to raise the key rate, which puzzled many analysts. This decision was quite unexpected against the backdrop of continuing inflation growth.

Meanwhile, the key rate is currently at a high level – 21%, which has already begun to have a negative impact on the Russian economy as a whole. Against this background, some experts even predict a recession, which, in their opinion, may begin as early as next year.

In turn, the question remains open: why did such a prolonged tightening of the monetary policy by the Bank of Russia not bring visible results?

Leading expert of the International Financial Center Vladimir Rozhankovsky voiced his version of what happened.

According to him, the rate increase is being done to increase the attractiveness of the national currency in relation to others (including the dollar). This situation attracts investors, providing an additional inflow of funds into the country's economy.

In turn, Russia today is in so-called "economic isolation". The growth of supply, which the head of the Central Bank Nabiullina talks about, is practically impossible for the reason that our national currency exists in a closed system.

As a result, the influx of money supply is mostly realized through consumption, only accelerating inflation, and another part goes to bank deposits, but not to the real sectors of the economy, in particular to the stock market.

Against this background, the money supply on high-interest deposits is growing, while the supply of goods cannot increase due to difficulties in expanding existing capacities. Including because of expensive loans.

Comments

[AlekMikh]

At least there is no hyperinflation despite the huge budget expenditures associated with the war. The country has entered a temporary recession, which it will safely survive, I am sure.

[Novosibirsk]

Quote from an enometist: "Not a single country has been able to implement planning algorithms at the new turn. But many countries are striving for this, since the crisis will be very serious when the American bubbles begin to burst. The Americans have already taken up this under Biden. In fact, they are finding a way out in the Stalinist model. And at this time we are listening to nonsense from the UN rostrum. We, like the rest of the world, manage the economy using the tools of the 16th-18th centuries (customs, subsidies, up rates, down rates, lobbying of interests - who will allocate how much to whom - that's the whole game of economics). We do not see any transparency of information about the economy in the age of information technology. False theories and false econometrics prevail. And the more complex and confusing economic ties are, the more important cybernetic science becomes. We will understand - we will survive and create a future for our descendants"

[AlekMikh]

You are wrong Novosibirsk, the US during the Vietnam War raised the key rate to 21% per dollar, imagine, and nothing, survived and turned into the world's leading economy. Stalin also supported a tough credit and monetary policy and already in 1944 budget revenues equaled expenditures. And only your fellow countrymen, the Little Russians Khrushchev and Lenka, ruined both the economy and the cool country of the USSR with the printing press

[Novosibirsk]

What does this have to do with your fellow countrymen?

[Novosibirsk]

The United States became the world's number one economy BEFORE World War II. And the quote is not mine, but from economist Veduta. Something tells me you're in the wrong weight class...

[AlekMikh]

So the USSR turned from an undeveloped agrarian country into the world's second economy thanks to the efforts of Stalin and the Soviet people. And you justify Khrushchev and Brezhnev, they supposedly gave long-term loans to various asses, just to emphasize that the Union is such a cool country, there is free medicine and other things. So it all turned out to be short-lived. But you again insist that this experiment should be repeated in the new Russia

[Novosibirsk]

You have the wrong address. I did not justify anyone.

[Novosibirsk]

Since 64 the country has already been moving towards capitalism. So what experiment are you talking about, I don't understand you?

[Pleiades]

That last criticism is a poor argument since everyone including an economist can lie, lies have a motive, and motive is easy to find: on tax payroll. The expert doesn't publish what he thinks, he publishes what his donors want people to believe.

There is only one real motivation to increase the deposits rate: to stop people from taking too much of their money out of banks.
That is what happened for ex in 2020.
The economical havoc regimes caused with their lockdowns, drove a lot of people from electronic number at bank to cash in own storage.
The speed at which that happened was not seen before.
https://data.ecb.europa.eu/data/datasets/BKN/BKN.M.U2.NC10.B.ALLD.AS.S.E
(see trend line angle)
Which was the direct reason for central banks/banks to increase the near zero% that had been for like a decade (since the previous crisis), in a very short time to 3%.
They were forced to replenish bank vaults because bank personell or ATM's telling people no banknotes left to give is no option due to consequences full fledged bank runs expanding to the whole of the central banks bank system.

So that the Russian central bank does NOT increase the rate, is rather a sign of trust than distrust.

And in the end, money is a mere inbetween step to what people want.
What matters is that is produced what people need, for a price they can pay.

[yuriy55]

Quote: AlekMikh

The country has entered a temporary recession, which it will survive safely, I am sure.

A country that survived the hyperinflation of the 90s and the reformers from the State Department may survive this period, but will come out of it with great losses.
The Central Bank's policy itself, when a strict selection (selection) of financial organizations, a moderate refinancing rate and control over the currency proceeds are required (not to mention various schemes for withdrawing profits through offshore companies), indicates that someone is seriously and deliberately planning to destroy the ENTIRE financial system of the state.
And this is confirmed by the fact that all of Nabiullina's antics and jumps do not lead to the desired result. Constant inflation eats up all savings inside, and the withdrawal of currency abroad (under some plausible goals) deprives the country of reserves for investment.
* * *
In a country where there is a shortage of businesses and workers for them, there currently exists:

As of November 1, 2024, there are 317 operating banks in Russia (221 banks with a universal license, 96 with a basic license) and 38 non-bank credit institutions.

And this happens because

Quote: Million

Because there are enemies all around.

[Novosibirsk]

Yes. They have been "coming out" of the recession for 30 years. Maslyukov said then that it would take 10 years, so they got scared and kicked him out in less than a year.

[sdivt]

Quote: yuriy55

All of Nabiullina's antics and jumps do not lead to the desired result

Dear Sir, what do you want from Nabibullina if the country is at war?
The country is isolated, almost a million able-bodied men are cut off from their industries (and therefore do not produce material goods), and an even greater number of people produce not televisions or children's toys, but weapons so that the first million can fight.
Dear Sir, look around! The country is switching to war footing! But you and I are still eating bread and butter, and if we are lucky enough to live 200-300 km from Ukraine, then we only know about the war from TV and from the price tags in stores
Understand, no, there are no recipes, methods, or mechanisms for improving the economy when the country burns millions and millions in the crucible of war every day.
Daily!
Almost three years
It's simply amazing that in such conditions, we, well-fed and tired of Internet battles, sit on our sofas, lazily scold the Central Bank's policy, and do not look for a piece of moldy bread in the garbage.

[yuriy55]

Quote from sdivt

Dear Sir, what do you want from Nabibullina if the country is at war?

Is the country at war?

"Two plow, and seven wave their hands"

It is impossible to set million-dollar salaries for government officials during hard times... It is unfair...
And your Nabiullina, exhausted by backbreaking work, lowered the ruble by more than three times during her time in office... And there was no war then...
Where did he and Siluanov invest the gold and foreign currency reserves, if Putin had once warned about dust and torment?

Quote from sdivt

and not looking for a piece of moldy bread in the trash

Somehow I haven't met a single poor official in the shops... They are the ones who have fun in Moscow and St. Petersburg...

[sdivt]

Quote: yuriy55

I haven't met a single poor official in the shops... They are the ones who enjoy the merrymaking in Moscow and St. Petersburg...

Got you.
At LBS - people are dying, Moscow-Petersburg - they are having fun... Nabibullina is clearly to blame, clearly

Quote: yuriy55

Two plow, and seven wave their hands

And here Nabibullina is to blame
Ok, I agree with you
Your arguments are irrefutable.

ps
and regarding the poor officials...
In Soviet times there was a short joke about a Jewish loader
a poor official - from the same series
rather, you and I will go out into the world
but - yes, I agree, there is no order in the country, and I already know who is to blame...

[bug120560]

Actually, her name is Elvira Nabiullina, not Nabibullina (sorry if I didn't get your irony). And she's not guilty of anything, she's just an executor of someone else's will, all her actions are determined and she just carries them out. You know, in a puppet theater there are these cloth dolls that they put on your hand, something like that.

[Sergey_O]

There is a flaw in your comment. Count how many economists there are in the government. In the past it was 50% + 1 sociologist.

[Pleiades]

1 million soldiers and 1 million bogus "jobs" can have a same effect.
If for ex an EU state apparatus has 1 million €2000 employees that fill their working time with things nobody would voluntarily pay for, and Russia has INSTEAD 1 million €2000 soldiers, the economic burden of both is the exact same.

[Stas157]

Quote from sdivt

almost million able-bodied men cut off from their production

What? Were they torn away from the factories?? Nowadays it is difficult to find a person who works at a factory! What are you talking about? And ask what kind of contingent goes there and where they were recruited from.

[sdivt]

Quote: Stas157

Were they torn away from factories? ... find out what kind of contingent goes there and where they were recruited from.

I think this is something you should inquire about.
From my far from numerous circle of acquaintances - and there are examples
Next
Anyone who signed a contract had previously participated in the national economy in one way or another. Not necessarily at a factory, in any case he produced goods or services. Perhaps he could have been some new-fangled efficient manager, but such people do not get into the SVO.
And, even if the benefit from the conscript before the SVO was minimal - from the first day he began to receive 200k+ per month - and this is much more than the average Russian salary. Many times more. And they must be paid every month.
Where does this money come from, any guesses?
Next
Rehabilitation of the injured, assistance to the families of the deceased, those who lost their breadwinner, etc.
The restoration of regions is a completely separate topic, and the amounts involved are astronomical, many times greater than the payments to the military.
Just remember the Kursk region, remember our border regions, with daily arrivals - all this is constantly being restored, it is not abandoned!
Once again - where does this money come from?
No answers
But to criticize the Central Bank is sacred, yes...

[Stas157]

Quote from sdivt

Once again - where does this money come from?

A naive question. They print it! And then they spread inflation throughout the country. The citizen then pays for all these "payments" from his wallet in the store in the form of the difference in the increased price of goods.

[Sergey_O]

And it's even worse. The natural population decline since 1992 is more than 17 million. And the number of enterprises that have perished is between 78 and 100 thousand. And there is no unemployment.

[sdivt]

Quote: Sergey_O

Natural population decline since 1992 is more than 17 million

Very interesting figures
Could you describe them in a little more detail?
For example, I have a poor understanding of this.
If we take the population of Russia in this year, 2024, as a basis, it is slightly more than 146 million people.
If we take into account your 17 million, then we must understand that in Russia, in 1992, 163 million people lived?
146+17=163
But for some reason I don’t find such figures in the statistics.

[Sergey_O]

You have to be careful with the definitions here. Here is the site http://www.statdata.ru/russia you need to find the table: Before the Great Patriotic War
Natural population movement before the Great Patriotic War according to demographers E. M. Andreev, L. E. Darsky, T. L. Kharkova [1]
Then look at the 5th column. In recent years, I supplemented it by making a request: EUN (natural population decline) in 2022, etc. I searched for the table for a long time. And if there are three Federal Laws and a table next to each other, then Chubais is a kind gnome. Three Federal Laws LAW OF THE RSFSR OF 06.12.91 N 1992-I "ON VALUE ADDED TAX" December 6, 1991 N 1
LAW OF THE RSFSR OF 07.12.91 N 1998-1 ON INCOME TAX FOR INDIVIDUALS
LAW OF THE RUSSIAN FEDERATION of 27.12.91 N 2116-I "ON PROFIT TAX OF ENTERPRISES AND ORGANIZATIONS

[sdivt]

About the kind gnome Chubais and about the value added tax - this is, of course, very fascinating
But I was wondering where you got the mention of a natural population decline of 17 million people since 1992.

[Andrei from Chelyabinsk]

Quote: AlekMikh

At least there is no hyperinflation despite the huge budget expenditures associated with the war.

I beg you:))))))) In the USA during WWII, it was the gigantic military output that, firstly, finally brought the country out of the economic crisis (the Great Depression was officially overcome earlier, but in reality it took place in 1939), and secondly, confirmed and affirmed the leading role of the USA in industry following WWII. That is, for the USA, those military expenses became a great blessing, and for us... "thank God, at least there is no hyperinflation"?:)))

[AlekMikh]

So, open the historical chart of the key rate change in the USA and see what the rate was during the Vietnam War and what the inflation was there. Stop inflating the theories of "academician" Glazyev. Don't they give you loans? Not everyone needs loans, there are people and organizations that live and develop their business on their own. The future belongs to them.

[Andrei from Chelyabinsk]

Quote: AlekMikh

So you open the historical chart of changes in the key rate in the USA and see what the rate was during the Vietnam War and what the inflation was there.

So the Vietnam War is solely to blame? And the abandonment of the gold standard, the OPEC oil embargo, they just passed by?
Nude nude

Quote: AlekMikh

Enough here to inflate the theories of “academician” Glazyev.

If you had at least a basic knowledge of economics, within the limits of a second or third year, you would understand that I am not speaking for Glazyev, but for Keynes's theory, which, oddly enough, Glazyev largely adheres to. You would also know that it was the Keynesian approach to economic management used by Roosevelt that led the US out of the Great Depression, while your beloved monetarism led the US into the Great Depression.

Quote: AlekMikh

So not everyone needs loans, there are people and organizations that live and develop their business on their own.

And they cannot compete with businesses that can attract abundant and cheap loans.

[AlekMikh]

You are incompetent. You do not know how (or do not want to learn) to dose the credit load in accordance with the real possibilities of the business? Do you want low interest rates on loans? Do something that the state is ready to subsidize, to the extent that the state has money for these subsidies.

When opening his LLC, no one promised anything to a businessman - no guaranteed loans, no guaranteed sales, no guaranteed macroeconomic conditions. If you want stability and for all the risks to be borne by someone else - go to work for a salary, preferably in a budgetary organization or as an official

[Andrei from Chelyabinsk]

Quote: AlekMikh

You are incompetent.

Your attempt to shift the blame to my personal effectiveness can only evoke a smile.

Quote: AlekMikh

Don’t know how (or don’t want to learn) to dose the credit load in accordance with the real capabilities of the business?

Please don't try to pull the wool over my eyes. At a low interest rate, a company can attract more credit, provide more modern and/or more productive production facilities, conduct more R&D, etc. than at a high rate, paying the same amount for the credit. Therefore, don't talk about low personal efficiency, you need to explain how you can compete with a foreign company that can attract several times more resources to implement a project similar to yours.
Can you explain?:))))
You won't be able to. Because you don't know economics. And if you did, you would understand that it is impossible, all other things being equal.

Quote: AlekMikh

When opening his LLC, no one promised the businessman anything - no guaranteed loans

True. No one promises anything to importers either. But if we want to compete with import business (and we want import substitution), then the conditions for our businessman and foreigner must be EQUAL. And the state is responsible for creating equal conditions. Ours, by the way, was responsible.

Quote: AlekMikh

Do you want stability and all risks?

You are now talking to a person who has a higher education in economics, has worked in the profession for more than a quarter of a century, has long since reached the level of director of economics and finance and has pulled (not alone, but still) two city-forming enterprises out of bankruptcy.

[guest]

Quote: Andrey from Chelyabinsk

It is necessary that the conditions for our businessman and foreign ones be EQUAL.

No, the conditions for our businessman need to be better than for a foreign one.

[AlekMikh]

Those industries and enterprises where import substitution is important for the state, it does it to the best of its ability, subsidizes. And the rest GO TO HELL! I can't even believe that you have merits in economics and monetary policy. Are you by any chance writing here from Malorossiya? A lot of such experts write here. Especially your nickname is "Andriyka from Chelyabinsk"

[Andrei from Chelyabinsk]

Quote: AlekMikh

Those industries and enterprises where import substitution is important to the state, it does this to the best of its ability and subsidizes.

Yep. Over the course of its history, which began in 2014, the FRP has issued 525 billion rubles, of which about 200 billion rubles have returned to it. Accordingly, the current loan portfolio of the FRP can be estimated at 325 billion rubles or so.
For comparison, the corporate loan portfolio of Sberbank PJSC (that is, only legal entities, without loans to the population) in 2023 amounted to 22,1 trillion rubles. The FRP issued 2023 billion rubles in 142, and Sberbank issued 2023 trillion rubles in August 1,9 alone. And Sberbank is not the only bank in Russia. The same Gazprombank, for example, has a corporate loan portfolio of about 10 trillion rubles.
That is, "subsidization" is a drop in the ocean

Quote: AlekMikh

the rest GO TO HELL!

True. That is, the bulk of our business is going to waste and cannot compete with foreign manufacturers. But only a fool would say that this is normal and that it should be so. Because the result is that our business is not developing, the state is not receiving enough taxes.
I would recommend you to read my article
https://topwar.ru/245100-grjaduschij-jekonomicheskij-krizis-rf-i-komu-za-nego-skazat-spasibo.html
But it is clearly beyond your comprehension - given that you, being completely incapable of objecting on the merits, are again resorting to personal attacks.
And it would be fine if they just switched. But the question is HOW you do it. What is this?

Quote: AlekMikh

"Andiyka from Chelyabinsk"

What kind of kindergarten is this? In the first and second grades, children come up with even more offensive names

[Andrei from Chelyabinsk]

Quote: AlekMikh

I don't understand you at all

This is not surprising.

Quote: AlekMikh

All these arguments of yours are true for peaceful times. And today in Russia there are exceptional conditions, sanctions, etc., requiring strict rules in the area of ​​monetary credit circulation.

Market economy is defined, roughly, by demand, supply, government procurement, availability and price of credit resources. Much has been written about how to manage them.
But you haven't read this

[Sergey_O]

It looks like you are talking to a person who has never even seen the factory entrance, let alone walked through it.

[Andrei from Chelyabinsk]

Quote: Sergey_O

It looks like you are talking to a person who has never even seen the factory's checkpoint, let alone walked through it.

You are undoubtedly right.

[Stas157]

Quote: AlekMikh

there are people and organizations that live and develop their business on their own. The future is theirs

Are you from the Stone Age or something? When did business (not small business!) develop itself on its own? Have you heard anything about investments, injections...? Do you know that now in the Russian Federation large businesses place bonds at 25% per annum! Is this probably because they have nowhere to put their own money? It is not clear how they will pay it back later.

[Sergey_O]

Do you not have the feeling that today's investment loans are aimed at finishing off still-living enterprises?

[alexoff]

The US is a wonderful country, everything is for their benefit. High rates - everyone runs to invest in the American dollar and the economy as a whole. Low rates - the Americans buy everyone for next to nothing. We have high rates - business milks people for everything. Low rates - business takes out loans and disappears with them somewhere out there. The Americans will extract profit from every bantustan - we always have the wrong allies

[sdivt]

Quote: Andrey from Chelyabinsk

for the US those military expenses became a great blessing, but for us... "thank God, at least there is no hyperinflation"?

You really don't see the difference between these two episodes?
The US emerged from the Great Depression by selling military-industrial complex products to us. Receiving solid gold for it. That is, trivially, by producing and exporting goods
And to whom do we sell our military-industrial complex products?
All these missiles, planes, ammunition? For ourselves?
Do you think this is equivalent?!

[Andrei from Chelyabinsk]

Quote from sdivt

You really don't see the difference between these two episodes?
The US emerged from the Great Depression by selling military-industrial complex products to us. Receiving solid gold for it

Study at your leisure what Lend-Lease is. The Americans poured a ton of money into the USSR, many times more into England, and I won't even mention the titanic expenses on their own army and navy. Gold paid for 0,000 of these expenses.

[sdivt]

Quote: Andrey from Chelyabinsk

The Americans poured a ton of money into the USSR, and many times more into England, and I won't even mention the titanic expenses on their own army and navy.

Well, how can you explain this?
"Titanic expenses", "poured in a ton of money" - the same money that doesn't exist? Otherwise, where did the Great Depression come from?

[Andrei from Chelyabinsk]

Quote from sdivt

Well, how can you explain this?

Why should I explain this if everything was explained long before me? Read Keynes's theory (Keynesianism) - this is one of two (the second is monetarism) fundamental theories about the role and tasks of the state in a market economy.

Quote from sdivt

"Titanic expenses", "poured in a ton of money" - the same money that doesn't exist? Otherwise, where did the Great Depression come from?

You will be surprised, but the Great Depression is a process that is not at all similar to the Russian crises. Here everything comes down to underproduction and inflation, and there was overproduction:)))

[Sergey_O]

A little more, not just a little, the Americans also traded with Germany.

[Pleiades]

Military output that brings an economy out of a crisis?
It's what brings a crisis.
The then-new Federal Reserve paid (new dollars) the WWI intervention of the USA.
And paid the bills of the Roaring Twenties.
But a dollar more waters existing dollars and when existing dollars later on get spend, demand gets bigger than supply, with a sole remedy forcing people to work harder to compensate for the loss.
And if that latter fails, a crisis.
The Great Depression was the result of the Roaring Twenties which were the result of the Federal Reserves policy, that did exactly the opposite of what it declared at its creation by the USA regime.
The military output served as an excuse to deny people the welfare they deserved after creating welfare themselves, and get away with it.
The leading role of the USA following WWII was not due to the USA regime, but to the simple fact that all other countries economies suffered major damage and losses due to the war, and the USA did not.

[Andrei from Chelyabinsk]

Quote: Pleiades

Military output that brings an economy out of a crisis?
It's what brings a crisis.

For those who are not familiar with economics and do not understand how fruitfully a state defense order can influence a country's economy (naturally, under certain conditions), this is how it looks

[Alekseev]

Inflation is not only the Central Bank, and the key rate is just one of the instruments.
Only a moron could fail to guess that the emission of the ruble was used to finance military actions. But there is no quick "emission" of goods and services, unlike currencies. They are not produced at the behest of a magician.
Here you have inflation. The key rate is high so that money goes not to purchases, but to deposits, and consumer loans are taken out less. It is designed to reduce CONSUMPTION, demand. Lower demand - lower prices, i.e. inflation.
Loans for key industries and agricultural producers must be preferential and, of course, targeted.
It is difficult to do all this in a balanced way, but there is no other way. And considering that in the conditions of war and unprecedented sanctions we do not gnaw bark like hares in winter, but live as if it were peacetime, much is being done correctly.

[Sergey_O]

Is there not a feeling that the West invented the war to distract from the tax burden in Russia?

[Vend]

To reduce inflation we need to stop feeding parasites: migrant families, Abkhazia and others.

[Million]

Because there are enemies all around.

[Amateur]

"Somewhere someone will listen to me and say: "What are you talking about? What increase? I have it the same as before." And someone will say: "I have it less now/ Of course, this happens, this happens. I'm talking about average figures","....
(Self-critical speech by V.V. Putin at a press conference on 19.12.24/XNUMX/XNUMX)

Average figures sometimes give surprising results. For example, if Potanin (Alekperov, Rotenberg or someone like that) buys a new yacht for $500000000, and 100000 pensioners increase their number of days by 1 due to rising prices for food and essential goods without meat, then on average the standard of living of Russians will increase by 1.333% (all figures are conditional). Pensioners will understand and appreciate this.

The average temperature of patients in the hospital increased by 1% during the reporting period.
(Old Soviet joke)

[yuriy55]

Quote: Amateur

For example, if Potanin (Alekperov, Rotenberg or someone like that)

And there are such figures as Melnichenko, Mikhelson, Lisin...
These people have latched onto Russia's national wealth like leeches and are sucking the last juices out of it (when you can invest nothing, just take), like insatiable encephalitis ticks, poisoning the once healthy mechanism of the Russian economy...
* * *
The country was dying without these billionaires... We were living in hunger...
Or maybe it happened because of their insatiable passion for profit?

[glock-17]

One eats meat, another rice, and the third cabbage, but on average we eat cabbage rolls.

[Novosibirsk]

Who believes that all this is just for the sake of containing inflation?

[agond]

Inflation can be contained not only by a high interest rate, perhaps a law could be passed so that the same product, in the same place, at the same time, would be sold at the same price, otherwise you stand in line at the checkout and someone gets a discount, but someone doesn’t, that is, for the same amount of money they sell different quantities of goods, I think this undermines trust in money as such.

[paul3390]

Our inflation is not ruble-based, it is actually dollar-based. Because despite all the squeals - like import substitution has remained a fiction. And for import - they want dollars. Dollars are taken out of the country by trainloads and highly efficient owners. Hence the demand for dollars.

And the current turn is a direct consequence of the wise permission to leave three quarters of foreign currency earnings outside the codon. If the currency does not get back into the country - what will happen? Of course - there will not be enough of it, and the price will skyrocket. Plus - there is a feeling that at the beginning of November they allowed someone very large to leave our assets, and naturally - for this he again needed foreign currency, he is not going to take rubles to the West, is he?

[VicktorVR]

Yes Yes.
First, the Central Bank collapsed the ruble, which automatically led to a spiral of price growth on everything, since imports are everywhere, and for some reason no one wants to regulate anything except the auto market (import substitution?, no, haven't heard of it).
Then they announced that it was because of the overheating of the market and too high salaries and raised the rate. That finally killed economic growth, the industry already had problems due to the growth of prices for imported goods, now it is unrealistic to get a loan.
For some reason, only banks are breaking profit records. There is a conspiracy, I hope the "doctors" will soon get to the financial and economic block and the Central Bank. Although they have a lot of work to do in the Ministry of Defense...

[OlegEKB]

For some reason, only banks are breaking profit records.

look at Sber's reporting for the first 9 months of 2024 compared to 2023, there are no records there
normal growth 6,8%

[Kuziming]

Let's look at the causes of inflation.
We have money, we have production, we have consumption, and scraps of foreign trade.
1. Let's start with consumption.
What do people consume:
- food products - mostly everything is our own.
- gas, electricity, petrol - our own.
- household appliances - half my own.
- electronics - China.
- cars - China, a little bit of our own.
- Machine tools are imported, mainly from China.
- Complex industrial products, including nails - China.
2. What we produce:
- Simple resources without primary processing. No one really needs them anymore.
- Food products.
- Assembly of some products from imported components.
- I would like to give an example of mass production of something from our own raw materials, but now I can’t remember anything, let the respected experts tell me.
- Single unique projects, such as ships and nuclear power plants.
3. Printing money and protectionism:
- money brings super profits to managers and management/cut-off/kickback structures.
That is, attempts to inject money into a specific sector or territory will primarily enrich managers and administrators, with only crumbs reaching the mechanisms of real production.
- resources such as cheap gas or free electricity. Moscow and some republics of the Caucasus.
No protectionism for our Siberia and the Far East, the Urals, the Russian North.

Brief conclusions:
We don't have production and development, our system stimulates the redistribution of resources in favor of the most resourceful, and not production by the most hard-working and development by the smartest.
The structure of the economy again approached that of Russia before Peter the Great.
Reforms are needed in favor of domestic producers.

[lshka]

Does anyone else take loans at such %? Or are they not satisfied with those "stupid" people who took them and "freeze" their "money"?

[Soldatov V.]

This is what the capitalists and bourgeois have not done for 35 years. Inflation, rising prices, meager pensions for the majority of pensioners. They have even lived to see a war on their own territory. Having a child means living on handouts from the state. Builders, realtors, and banks rob you three times for housing. Brezhnev is rolling in his grave laughing.

[Old Horseradish]

The oligarchy sells raw materials to the West, or somewhere else. It transfers the money for this to the West, or somewhere else. This is no longer called a colony, but a subcolony. A concrete fact: three hundred billion that were sent to the West is this money.

[Mikhail m]

High wages (military-industrial complex, military-industrial complex) with unchanged or even decreasing supply inevitably lead to inflation growth. The rate can be raised as much as you like, it is compensated by increasing interest on deposits. Production is reduced due to the inaccessibility of loans, which leads to higher prices.

[tralflot1832]

I wonder where banks get the money to pay high interest rates on deposits out of thin air?

[OlegEKB]

are placed in government bonds
banks wouldn't take money if they didn't know where to put it

[Sergey Kirakosyan]

The monetary policy of our Central Bank is like shuffling beds in a brothel. They don't even ask the whores to get up from these beds...
If you want to "import substitute something" - go to the bank for a loan at 35 percent. In China, such a Central Bank would no longer be a fertilizer, but tomatoes and cucumbers!!!

[paul3390]

Because what the Central Bank is doing is nonsense and sabotage. It's obvious that any business is done on credit money. And if you take the price of the same, the manufacturer or seller will include exactly this amount in the cost of the goods. And delivery. And what does that mean? Yeah, inflation. It's the most...

[OlegEKB]

It's a no brainer that any business is done with borrowed money.

so any
a month ago I had to visit a metal construction production facility, they don't have any loans at all
receive targeted subsidies from the state

[guest]

Why has such a long-term tightening of monetary policy by the Bank of Russia not produced any visible results?

Babakov has already given his answer many times.

[foxes]

Probably because the same Central Bank constantly devalues ​​the ruble, which in a country of total imports immediately leads to price growth? With such an interest rate, no economic growth and import substitution are possible. In 2023, before the devaluation, there was no price growth.

[fiberboard]

Since Pavlov's "economic reform" (robbing the population of the USSR), the country has been searching for the "most effective economic policy". We had "shock therapy" and "500 days". Young reformers openly said that old people, pensioners and many others would not survive their "reforms". The grandson of one of the ardent children's communist writers quite seriously claimed that Russia would buy everything it needed (I wonder if Arkady Gaidar were alive, would he have strangled his grandson himself or asked someone to do it?). Since then, several presidents have changed in Russia (only one of them says that he is changing), money has changed, but it has become easier for the people for a short time. "The best Minister of Finance" Alexei Kudrin (they write that he is now in his "historical homeland", where the entire first government of Mr. Putin is now) has reliably tied the monetary and financial component of our economy to international financial organizations (primarily the IMF). Mrs. Elvira only follows the instructions of her "teacher" in monetary policy and that's it. This is called "Kudrinsky's economy". Money is withdrawn, transferred abroad, American "securities" are bought there, interest is paid on them, which is used to finance foreign projects of the Russian government (for example, the construction of a nuclear power plant in Turkey). This money is not returned to the Russian economy. In addition, money is withdrawn by "oligarch friends". Remember: during the crisis, the Russian government rushed to save not pensioners, small and medium businesses, industrial enterprises, or trade, but the capital of the oligarchs. They were allocated huge sums. But when a large financial hole appeared in the country's budget, and the government turned to the oligarchs for help, they refused. Now we are waging military action, a lot of money is needed, gold and foreign exchange reserves are arrested abroad. Well, that's it, all this is forcing the government and the Central Bank to raise the rate, accelerating inflation.

[OlegEKB]

According to him, the rate increase is being done to increase the attractiveness of the national currency in relation to others (including the dollar). This situation attracts investors, providing an additional inflow of funds into the country's economy.

Drive this expert away
In Russia we currently do not have currency trading (dollar and euro) on the stock exchange, and accordingly there is no carry trade strategy

[Fangaro]

How can I make it simpler?
The Central Bank decides what the interest rate on loans will be?
The Central Bank prints paper bills, which then end up in the wallets of everyone who is entitled to them by law?
The Central Bank decides where to send the printed banknotes (to kindergarten teachers, doctors, secondary school teachers, police officers, workers at military-industrial complex factories, workers at agricultural enterprises, engineers at Roscosmos, engineers at Yandex, State Duma deputies, minibus drivers, janitors at housing and communal services)?
Is the Central Bank doing a terrible job?

[Wayfarer_2]

What is inflation? It is the excess of money supply over goods. That is, there is a lot of money, but few goods. As a result, money is cheap, and goods are expensive. This is inflation. And it grows when the amount of money grows faster than the amount of goods. Then everything becomes more expensive, i.e. prices rise. Our Bank constantly fights inflation in only one way - by restraining the growth of the money supply. But when only this one method is used, unpleasant things happen. Enterprises have nowhere to get cheap money to expand production and increase the production of goods. That is, there are few goods left. Therefore, prices still grow, albeit a little slower, but they grow. The Bank has no other tools to fight inflation. But the government does. A well-functioning government. Which understands that it is necessary to increase the production of goods. Especially consumer goods. When there is a lot of them, they are cheaper. And the population can spend their savings. Prices fall. Because, in addition to the decrease in the money supply, the commodity supply has increased. That is - in short. More goods need to be produced. So we'll get off the oil needle. Because more taxes from producers will come into the budget. And additional jobs will appear.

[Esaul]

but not in the real sectors of the economy, in particular in the stock market

Well, the woman made me laugh, calling this soap bubble, created in the American manner, the real sector. It's definitely time for her to go to the loony bin, otherwise she'll completely ruin the economy, although maybe someone needs it...

[Eugene Zaboy]

On the one hand, it is absolutely obvious that the Central Bank of Russia needs a more flexible policy, through the introduction of a differentiated rate, for the development of industry and agriculture. On the other hand, how to control the expenditure of loans at preferential rates. What scope for fraud. A vicious circle.

[Glagol1]

The obvious thing: the economy is under pressure from export problems, imports are also going badly, there is negative unemployment and sanctions to block assets. In such conditions, classic methods of fighting inflation do not work fully. But inflation is still under control. Look at neighboring Turkey, the rate is 48%. And everything is fine with them, they are not at war, trade with the Russian Federation has taken off, the market is 0,4 of the Russian one. Tourism is on a wild rise, logistics, transit. And 48%!!! In general, you can’t fully understand. The shortage of personnel is wild. The partners had a vacancy for maternity leave, the girl said, pardon me, I’m disappearing for 3 years, and she was keeping taxes and accounts. Well, they are looking for a replacement. A simple position and an ordinary job, auditors are looking anyway. So they searched for 3 months, first for 80 thousand, then 90, barely found for 95 ... Well, this is Moscow, though.
There are simply no people.

[Totor5]

In Turkey everything is fine with the economy... well, well.

[Alexander Ra]

Inflation is an artificial and extremely subjective parameter that is used to hypnotize an entire country. Others would be more important, for example, the ratio of vital goods and services to those that are not, the coefficient of human potential utilization, the dissipation of information-matter-energy, etc.
And in general, given the loss of the most terrible – informational – sovereignty, getting carried away with studying inflation is simply ridiculous.

[Military77]

The key rate can be set at 500%, but it will not stop inflation, but will destroy industrial growth. Nabibulina and Silukhuanov are following the IMF instructions. Inflation is strictly tied to the rate, since import substitution is more on paper. And the Central Bank has clear instructions from the IMF - to slow down the growth of the Russian economy

[Totor5]

Banks are getting rich, industry is dying.
A cool system - in order to produce a tank for the state, the state issues a loan to the enterprise - the enterprise can take a loan from the bank not at 25%, but at 5% ... and the state will pay the difference to the bank... given that the bank takes a loan from the Central Bank (the state) at 21%.
The Central Bank's brilliant system, under which only banks get rich, essentially having nothing. And if you do it directly, they'll accuse you of being a communist and against capitalism and free competition.

[Totor5]

How can one explain the repeal of the law on the sale of foreign currency earnings?

[Totor5]

I have relatives working in the Central Bank, they say that under Naibulina it has become completely impossible to work. She dragged effective managers from somewhere after studying in the West and now they are constantly pestering people. They have come up with some tests and so on, all obviously from the West, and they are constantly forcing everyone to take these liberal tests and play some crazy games. They gave everyone a flash drive with some program and from it from a computer at home once a month or more often everyone must go live on a special program and play these games there, answer questions and fill out forms. I looked - well, it's pure schizophrenia, some kind of brainwashing. They complain that they have no time to work, all they have are some games and tests. They say that this did not happen under Primakov - everything worked and everyone worked. And now all there are some strange innovations, some lectures in the Western style and words are solid Anglicisms.
I watched Besogon recently, they say the Central Bank wants to remove temples and churches from the new money - like this offends the feelings of non-believers! I can say that I am not at all surprised, because the Central Bank now resembles a liberal garbage dump, like the Higher School of Economics, where the children of the heads of regional Central Banks study.

[the same doctor]

Why the Central Bank's Tight Monetary Policy Cannot Contain Inflation
.
Because it's not hard.
The Central Bank's policy is aimed at stimulating the export of resources and the import of currency. That is, the amount of goods on the domestic market decreases, and the money supply grows. Even if all revenue is left abroad, the money supply will still grow by the amount of domestic production costs.
The Central Bank's showy actions regarding the key rate do not affect this process at all. The growth of the key rate only redistributes finances: oppresses the real sector and enriches financiers.
.
If we really want to stop inflation, the first step should be to limit exports to the amount of commodity imports and even some deficit in the foreign trade balance. The non-commodity withdrawal of currency and export income should be stopped within the framework of the policy of balancing commodity flows.
.
Naturally, Nabiullina, as a being without any real economic education, is useless for this job. I am sure she does not even know the basic causes of inflation.

[APASUS]

Because the Central Bank is only engaged in fighting inflation and that's it. But in essence it should contribute to the expansion of the trading base. Do our financiers have an action plan for economic development? Perhaps they do, but somehow its results are not convincing.
So much has been said and discussed, but why don’t we sell our resources only FOR RUBLES? Where are these instruments, exchanges, rating agencies, banks for transfers?

[Mikhail3]

Tight credit policy cannot contain inflation because it cannot contain inflation in principle. That is not what it is designed for.