The Central Bank of the Russian Federation decided at the next meeting to raise the discount rate to 15%. And this is despite the fact that the current inflation rate is 6%. That is, inflation is 6%, and the rate is already 15%.
Usually such decisions are made on the basis of actual data on CPI, employment and other key indicators of the economy, but here it is a bit the opposite.
The hidden meaning of everything that is happening
The increase in the rate indicates the potentially high risks of price growth in the domestic market (inflation), which is provoked by the US dollar.
The increased demand for the dollar from the Russian economy is well known to everyone - high import dependence with reduced export revenues.
In fact, devaluation benefits the budget, but for some reason all people have a criterion for their personal well-being tied to the US dollar.
The Central Bank of the Russian Federation does not dare to release the dollar into free floating. Because against the background of geopolitical events, there is a high probability of negative sentiments among large masses of the population from the natural devaluation of the ruble, and for the Central Bank of the Russian Federation, an excessively overvalued dollar exchange rate today is like a "red rag".
Nevertheless, understanding the current situation, the Central Bank of the Russian Federation nevertheless raises the discount rate to a level of 15%, thereby delineating the lower limit of what this whole situation can lead to in the near future.
And so, the key rate has increased by 6.5% (650 bps) since July 2023 - from 8.5% to 15%. (76% growth). At the same time, the US dollar exchange rate has increased from 92 rubles to 92 rubles from July to the current moment. Yes, yes, it remained at the same level. "The jump" to the 100 ruble mark was "brought down" artificially - by measures of mandatory sale of currency by exporters and the discount rate (to a lesser extent).
At the same time, the average annual inflation rate according to official data (taking into account the fact of 9 months of 2023) remains at the level of 6%.
Dynamics of inflation and the key rate of the Russian Federation
Dynamics of Brent crude oil prices, $/bbl.
Dynamics of Russian oil production, thousand barrels/day
The graphs show the excess of the discount rate of the inflation rate in the period from 2016 to 2020, but this was a time of excessive dollar liquidity due to peak production volumes (the maximum value reached 11 thousand barrels / day). Since 2021, there are no official statistics (nor are they published).
It is not difficult to guess what the Central Bank of the Russian Federation is leading everyone to, namely, by the prospect of the dollar exchange rate at the already pre-established minimum threshold for inflation (2 times higher than the current level - from 6% to 15%) in what seems to be a difficult situation in the oil industry.
The Central Bank of the Russian Federation raises the rate to 15% - the hidden meaning and prospects for the US dollar - Something like that!
