{"id":41782,"date":"2018-12-19T06:30:56","date_gmt":"2018-12-19T11:30:56","guid":{"rendered":"https:\/\/olduvai.ca\/?p=41782"},"modified":"2018-12-19T06:30:56","modified_gmt":"2018-12-19T11:30:56","slug":"inflation-targeting-madness-russia-raises-rates-again","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=41782","title":{"rendered":"Inflation Targeting Madness: Russia Raises Rates Again"},"content":{"rendered":"
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Inflation Targeting Madness: Russia Raises Rates Again<\/a><\/h3>\n<\/header>\n
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I continue to wonder who Bank of Russia President Elvira Nabuillina works for.\u00a0 Seriously.\u00a0 On Friday, in response to solid growth in Russian economic statistics over the past few months, Nabuillina again raised interest rates 0.25%.<\/p>\n

She still adheres to idiotic IMF-style \u2018inflation targeting\u2019 dogma.<\/p>\n

Price inflation in Russia finally got off the roughly 2.5% mat in August steadily rising to 3.8% in November.\u00a0 This prompted Nabuillina to raise rates again, stifling growth which itself was stifled by her overly-cautious rate cutting earlier in the cycle.<\/p>\n

The recovery in Russia after the Ruble crisis of 2014\/15 was exasperated by her holding interest rates too high for too long.\u00a0 The Russian bond market took way to long to normalize because of this lack of liquidity.<\/p>\n

In 2017 and early 2018, every time the Bank of Russia cut rates the Ruble would strengthen<\/a>, that\u2019s how high demand was for them.\u00a0 The Russian yield curve was approaching normalcy.<\/p>\n

\"\"<\/figure>\n

And Nabuillina is now, again, undermining it by trying to control price inflation as opposed to letting the market regulate itself.<\/p>\n

The short-term Russian bond market is screaming for some relief and the Bank of Russia won\u2019t accomodate.\u00a0 Remember, inflation in Russia is running just 3.8%, so we\u2019re talking a positive real yield on overnight money of 4%.\u00a0 This is not making it easy to liquefy a growing economy.\u00a0 Real yields of 4% on 3 to 5 year money?\u00a0 Ok.<\/p>\n

But overnight?\u00a0 \u00a0I\u2019m all for a cautious central bank that does not inflate massive bubbles but I\u2019m also not for a central bank to do the bidding of a country\u2019s adversaries either by undermining growth with needless austerity.<\/p>\n

Central Bank Fallacies<\/strong><\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Inflation Targeting Madness: Russia Raises Rates Again I continue to wonder who Bank of Russia President Elvira Nabuillina works for.\u00a0 Seriously.\u00a0 On Friday, in response to solid growth in Russian economic statistics over the past few months, Nabuillina again raised interest rates 0.25%. She still adheres to idiotic IMF-style \u2018inflation targeting\u2019 dogma. Price inflation in […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1067,122,23535,303,426,10305,16963,3650],"class_list":["post-41782","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-of-russia","tag-central-bank","tag-elvira-nabuillina","tag-fed","tag-inflation","tag-inflation-targeting","tag-tom-luongo","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/41782","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=41782"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/41782\/revisions"}],"predecessor-version":[{"id":41783,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/41782\/revisions\/41783"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=41782"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=41782"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=41782"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}