The Economy of Russia
The Central Bank and the Rouble
The central bank moved quickly in 2022 to defend the rouble, using high interest rates and capital controls.
Monetary policy was tested.
Emergency steps
Interest rates were raised sharply and capital controls imposed in early 2022.
Inflation
Later, inflation pressures returned, and rates were kept very high.
Exchange rate
The rouble fell, recovered and then fluctuated with trade and sanctions.
Trade-off
High rates fight inflation but slow investment and borrowing.
A high-rate economy
Borrowing costs for firms and households rose steeply.
Ignoring inflation when judging stability
Prices matter to households.
Key takeaways
- Rates rose sharply.
- Capital controls were used.
- Inflation persisted.
- Growth is constrained by high rates.
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