Russia (bbabo.net), - For more than a quarter of a century, the Bank of Russia has been treating inflation with an increase in interest rates and a tight monetary policy, and will not cure it in any way. If a doctor has been giving you the same medicine for more than 25 years, and you are not getting better, then you should immediately ask: "Is this medicine? And does the doctor understand the disease correctly?" For more than 20 years, there has been a staunch opposition among industrialists and economists to ultra-high interest rates and these rigidities under the slogan: "You are ruining economic growth for the sake of fighting inflation! But you can't cope!" And for 20 years there has been no answer to these moans and cries.
Everyone understands that in an emerging economy like Russia, in desperate need of investment and modernization, one cannot behave as if the central bank is in New York or London with Paris and Frankfurt. These are different realities. In such economies, the central bank takes on much more of the task of maintaining not only price stability, but also stimulating the economy, growth, and modernization. This is brilliantly proven by the central banks of the "economic miracle" countries.
First of all, in Asian countries, where the super-fast growth of monetization, saturation with loans continued for decades - and is happening now - with a decrease in interest rates and moderate inflation. But year, the ability of countries to invest and grow, their financial machine, is growing.
We are not among them. For decades now, the thesis has been discussed in Russia that our inflation is predominantly non-monetary, that the fight against inflation in Russia is primarily the freezing of prices regulated by the state and private monopolies, plus the most stringent antimonopoly control over prices and the creation of a truly competitive, market environment . In any case, in those recent years, when the government froze prices, setting future prices according to the “inflation minus” rather than “inflation plus” rule, prices immediately and noticeably slowed down.
The Bank of Russia, like any other Central Bank, has a lot of other ways to influence the money supply other than raising interest rates. The first is a direct impact on its value. For example, the Bank of China is actively engaged in this, increasing or decreasing refinancing on its part of commercial banks. And the Fed (USA), the European Central Bank, the Bank of England and others are no less active in this in programs for the repurchase of assets (bonds from the budget or bonds and other assets from commercial banks).
Wherever you throw it, there's a wedge everywhere. Raw materials are becoming cheaper in world markets - prices are rising. Raw materials are becoming more expensive - the same
The second is the impact through standards (reservations, liquidity, risk and a bunch of others). Tighten the screws, raise the reserve ratio, and squeeze the money supply. And, conversely, if you let go, new money and credit will "flow" into the economy. All this is well known, works remarkably well and raises the same questions - why keep the exorbitant price of money in Russia for decades, holding back economic growth in the most difficult way?
For more than 25 years we have been in the 50th - 80th top ten countries in the world in terms of interest rates on loans (the larger the "place", the worse). Today, in 85 countries of the world, the key rate of the central bank is lower than that of the Bank of Russia. If everything continues like this, then, waking up in 15-25 years, we will see the same highest Central Bank rate and all the same talk - when will the interest rate in Russia finally normalize?
What about inflation? We don't know whether to laugh or cry. When world prices for oil and other raw materials fall, the ruble weakens, imports rise in price in rubles, and everything in Russia follows it. When world prices for oil and other raw materials, on the contrary, grow, the ruble strengthens, Russian exporters say: “Well, how can we not raise prices within the country? Look how expensive everything is on world markets. This means that we must set our prices much higher , and if not, then it will be more profitable for us to deliver abroad, and not to the domestic market. Please understand us." And they raise prices.
So wherever you throw it, everywhere is a wedge. Raw materials are becoming cheaper in world markets - prices are rising. Raw materials are becoming more expensive - the same thing. The ruble is weakening - prices are rising. The ruble is strengthening - prices do not fall and eventually grow anyway. There will always be a reason. Economists will always explain.
Maybe we should deal not with monetary and interest rate policy, but with monopolies and oligopolies? Or take a closer look at the tariff / price policy of the state? Maybe we can finally tell ourselves that the Central Bank can do little in such a model of the economy, and if it can, then only together with the government, entering into price freeze / brake agreements annually?
In the meantime, interest drives up costs in the real sector, helping prices rise. Banks are doing well, making record profits, because every decision of the Bank of Russia to increase the key rate increases their interest margin. The growth of interest on deposits lags behind the growth of interest on their loans. And the Central Bank proudly announces their record annual profit.Let's repeat the inflation control formula once again. It is simple: freezing prices and tariffs by the state (prices “inflation minus” a year ahead) plus the strongest antimonopoly price controls (give resources to the FAS for this) plus “freezing” agreements with the largest monopolies, especially with those who are under state control , plus the creation of a truly market, competitive environment (the share of medium and small businesses is not 21-22% of GDP, but 40-55%) plus the normalization of the percentage to at least 3-4%, when the change in the key rate of the Central Bank occurs in microscopic doses, and not by leaps and bounds steps.
So, let's beat the prices? We are all looking forward to this, knowing full well that if nothing changes, then even when world inflation, which is currently the highest, finally falls in a year or two, then we in Russia can still remain in the same reality - with rising prices, always striving for 8-10% or even higher, for which there will always be reasons and a lot of explanations.
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