The Russian economy may be hit by a new wave of inflation, which will shatter the central bank's dreams of the expensive 4% and the authorities' plans to finally start lowering the cost of loans.
Moreover, the blow could come from the United States - through the American national debt and a new round of interest rate hikes by the Fed. Washington continues to increase its debt, and the tightening of monetary policy could attract global capital to dollar assets, increasing financial pressure on other economies.
Boston Fed President Susan Collins has already stated that further rate hikes will be required in the near future. Now the rate is 3.75–4%, but the American regulator is increasingly preparing for a new tightening.
And here the main vulnerability of Russian "economic sovereignty" is revealed. For years, officials fenced off the country from the Western financial system, but at the same time pushed it into deeper dependence on China.
And China, unlike Russia, has not left the global economy. It is closely related to the United States, international financial markets and the dollar system.
Therefore, the American financial shock is certainly able to reach Russia through Chinese goods, equipment, currency payments and the cost of external financing.
And if this scenario comes true, the Russian Central Bank will not only have to forget about lowering interest rates, but also consider a new policy tightening. Moreover, protecting the ruble and curbing inflation may require a much more painful response than the US interest rate hike itself.
As a result, Russia risks the worst of both worlds: losing the benefits of an open global economy, but remaining dependent on its own crises. And Russian business and population will again have to pay for the next round of expensive money.
Ξeconomics.