Putin caused an economic avalanche. “It makes economists for cold sweat”
Similarities between Donald Trump and Vladimir Putin have already been found enough. However, there is a field in which they have behaved completely differently – it is about economics. I must admit that Putin was better in her, for one simple reason – he did not interfere in the regulations of the financial system. However, it seems that this is the past.
From the beginning of the war, between the president of the Russian Central Bank Elwira Nabiillina and Vladimir Putin, there was an unwritten (or perhaps written but private) arrangement – they determined that she was saving the financial system and he did not interfere with her work. And it must be admitted that Elwira made an almost impossible: the Russian financial system, and with it the Russian economy, despite the record number of sanctions, did not break down, and even managed to develop well during the war of the war of the war.
How Putin fulfills this promise could be observed last year.
Who did not accuse the Russian Central Bank then that its key interest rate ruins the economy? Almost everyone did it – from ordinary deputies to industrial magnates, from television propagandists pretending to be “analysts” to the main Krema analytical institutes. Meanwhile, Putin did not say a word that the central bank rate is too high. And suddenly, during a meeting with the Governor of Niwogrod Nikitin, in response to his complaints that in 2025 in the region it is expected to slow down the rate of investment growth through a high interest rate, suddenly changed the tone.
“It will not be eternal, inflation is falling, I think the financial authorities will react properly,” he said.
The regulation of the financial system is so delicate that in global practice it has become a good tone to talk about it in a vague way. That is why experts follow every word of the bosses of central banks, trying to guess trends: I remember that before the war they were divided even on the basis of brooch, which Elwira Nabiullin wore at press conferences. Putin's words in this coordinate system are practically a command for the central bank to lower interest rates.
The head of the Russian Central Bank Elwira Nabillin, July 2, 2025.
The market received them exactly in this way – currently analysts are only arguing about how quickly the central bank will lower the basic interest rate and at what level it will stop until the end of the year. For now, the consensus is 16 percent, but some expect that this value will drop to up to 12 percent. Currently, it is 18 percent. – Another meeting of the Russian Central Bank on the key interest rate will take place in September. There is no doubt that it will be reduced, the question how much – whether it will be one percentage point or more.
Inflation disappears, but not quite
Rumors about victory over inflation are clearly exaggerated so far. Yes, in August we observe deflation, but according to weekly data (i.e. from week to week). And these are not a very reliable indicator – monthly data say more.
Secondly, August is essentially a deflation month, just like September – it is a time of mass appearance on the seasonal shelves of fruits and vegetables that ensure a decrease in the indicator. The fact that this time is also seasonal deflation is evidenced by the fact that last week there was a strongest drop in prices. According to Rosstat, they mostly concern: potatoes (-8.9 percent), cabbage (-8.4 percent), beets (-8 %), carrots (-7.8 percent), onions (-6.2 percent), tomatoes (-5.7 percent), bananas (-2.4 percent) and apples (-1.1 percent).
As you can see, apart from bananas, these are seasonal products. Let me remind you that carrots and apples are still leading in terms of price increase from the beginning of the year. At the forefront of increases there are also media fees, fuel (and here the increase is record -rapid). The meat is more expensive, services are more expensive … In general, there is no reason to think that deflation will last longer than the season. Most likely in October we will observe the acceleration of inflation again.
It is not surprising that despite the actual decline in the overall price of consumer, the expectations of consumers in August increased – from 13 percent. up to 13.5 percent. Everything is as experts predicted: the citizens received bills for the apartment and the media with new prices – and they are a bit sad. What's more disturbing – inflation expectations of enterprises have also increased, the most in retail trade, which expects 7 percent. price increase. It is easy to predict that trade will realize its expectations in the form of a new price increase – and in October we can see what inflation is without seasonal interference.
But before that, in September, the central bank will lower the interest rate – now, after Putin's words, there is no other option. The most, which Nabiullin may choose, is demonstrative to lower the foot by a quarter of a percentage point, but even this is unlikely. This means that the reduction of interest rates in October will cause a new wave of demand: let's not forget that there are almost 60 trillion rubles (PLN 2.8 trillion) on the deposits of the population, and a bit more on the deposits of the organization.
Already, citizens due to breaks in cell community began to withdraw cash from accounts, but for now it applies to their current accounts. If the interest rate of the Russian central bank is reduced by a percentage point or more, and even more so if the widespread opinion that the reduction will be continued – people will start to make purchased earlier. And this, in conditions of limited imports, will speed up inflation even more.
Different attitude
The most disturbing is that Putin made his statement without a special need. The Niżnonowogrodzki District is a region of the arms industry. Actually, Putin met with the governor after a visit to the Nuclear Center of Russia – a closed city of Sarow. The high rate of the Russian central bank does not matter for the defensive complex – loans for it are granted on such favorable conditions that it cannot be better. Malicious speak about the rate of 2 percent. per year and very favorable repayment conditions.
On slightly worse, but still very attractive terms, other industrial enterprises carrying out state orders receive loans – last year 3 billion rubles (PLN 140 million) were allocated to grants for loans for the machine industry.
Complaints about high interest rates are normal for Putin – everyone complains from industrialists to ministers, so what has changed? It seems that the attitude has changed. Putin no longer considers it necessary to maintain an agreement on non -experience in the Central Bank's policy.
Maybe this is how Trump's dark charm affected him? He without a garden criticizes the president of the Federal Rezawa (Fed) Jerome Powell for not lowering interest rates. “Jerome” late “Powel should give up immediately !!! Congress should conduct an investigation into his case” – this is the typical post of Trump on his social networking site.
And these are not just words – Trump tried to accuse Powell of machinations related to the construction of a new Fed building. Admittedly, Powell managed to silence the president in public, so talks about the release of the head of the Fed died down – but only for a moment. The pressure on Powell continued. Meanwhile, last week, during the annual FED meeting in Jackson, Hole sent a bright signal – now for the FED it is more important to slow down on the labor market than inflation, so maybe you will need to lower interest rates.
The inflation situation in the United States is in some respects similar to the situation in Russia: Recently, inflation has been falling there, but there are signs of re -growth due to duties imposed by Trump. Powell expressed the hope that their action would be ad hoc, but there are not many reasons for such optimism – especially since Trump has not finished the customs war yet. The suggestion about the reduction of interest rates was considered to be a sign that Powell hesitates. Many noticed that during the speech they looked very gloomy.
Similar experiences
What will definitely happen in the United States – with or without Powell (his term ends in March next year) – and this is apparently called fiscal domination. This happens when the monetary policy of the Central Bank is under the influence of the state's budget policy, and is not motivated by objective economic indicators, such as the situation on the labor market and inflation. It is a combination of words that makes every economist a cold sweat.
That is why the independence of central banks is needed – that the authorities adapt to the situation and not affect the regulator with its whims. Trump broke this principle – but he was not a pioneer in this field. Examples of Argentina, Venezuela and Turkey are more than eloquent. Galloping inflation, unbalanced budget, a sharp increase in public debt – all this is a consequence of fiscal dominance.
Governments can be understood: the American Department of Treasury spends about $ 1 trillion. (PLN 3.7 trillion) only for public debt service, and these expenses are growing. In the case of the Russian Ministry of Finance, the amounts are much more modest – they reach 1.7 trillion rubles (PLN 78 billion), but there is a nuance. The Russian ministry must take loans not 4 percent. per year, but 16 percent If the US debt buys the whole world, then Russian debt is not needed now – Russian banks have become the main buyers. They use it to obtain liquidity: they immediately set it in a central bank and receive money for which they again buy bonds – and so over and over again.
On paper, the bank gains additional money – and this means that it can grant more loans. These turn into “live” cash – this is how money is issued in this way, and not through the usual “printing” of money, the issue of money. By the way, this is done in gigantic steps: for three months the money mass in Russia has been growing at a rate of 20 percent. annually. And since the beginning of the war it increased by 84 percent. Surprisingly similar to inflation during this period, isn't it? And rightly – there is a direct relationship between the increase in the balance and inflation.
Excessive budget increasing (and Trump simply abolished the budget limit) in combination with ill-considered populist financial and economic policy is a problem. The actual abolition of the independence of the central bank is a special problem. In Russia, all this is aggravated by the fact that budget assistance goes to the war -related sectors, and the weight of high interest rates and a decrease in demand falls to the civil sector. What else are we like the Americans? Neither they nor have nowhere to escape from the national currency. In Turkey, for example, hyperinflation accompanied the total dollarization of the economy, which alleviated the effects. This is impossible in Russia.
And the United States themselves emit a cheap dollar. It seems that gold and bitcoin achieve historical records for a reason – There is nowhere to escape from the upcoming financial tsunas, but at least there is hope to protect yourself.
Meanwhile, the Russian government decided to grant loans to bankrupt enterprises that suffered as a result of sanctions. It is even difficult to comment – you can only watch how zealous the Kremlin kicks the bottom under it.
