Friday, December 24, 2010

Russia Increases Deposit Rates as Price Inflation Climbs

Russia's central bank raised overnight deposit rates to 2.75 percent, as of Monday, from 2.50 percent. The refinancing rate remains at a record low of 7.75 percent.

This rate hike is not likely to be the last, by far. Russian inflation could very well hit double digit rates in 2011. Thus, interest rates below the inflation rate will mean more money creation.

It looks like Russia is headed for a serious bout of price inflation for sure, and possibly stagflation.

1 comment:

  1. Why does Russia have a problem with inflation? Is is because they produce nothing (except for oil and gas) and import practically everything?