Bloomberg: Russia's "Good Options to Tackle Inflation Are Now Exhausted"
Russia's annual inflation rate rose to 6% in June (up from 5.3% previously), potentially forcing the central bank to pause its interest rate cuts at the July meeting — marking the first time since last June, when the easing cycle began, that it refrains from action. Governor Naabulina has previously warned that further room for monetary relaxation is "significantly narrowed," and curbing inflation will require "painfully high interest rates."
As inflation accelerates, Russia's fuel crisis has sharply worsened. Gasoline shortages have spread from the south and occupied regions to central and Pacific coastal areas. By late June, about 90% of regions were either imposing sales restrictions or reporting supply disruptions. Refinery output in June hit a 20-year low, gasoline prices rose 19.9% year-on-year, and surged another 2.1% in the first week of July, while diesel prices rose 3.4%. Rising transportation costs are being passed on to consumers, further fueling inflation expectations.
Analysts say the central bank is likely to maintain its current interest rate at the July meeting, or possibly make only a symbolic cut of 0.25 percentage points.
Additionally, Russia’s budget deficit reached 6 trillion rubles in June, with unlimited money printing, and over 50 regions reported long queues at gas stations. Economist Plastun summed up: For the Kremlin, this month marks the point where "good options have been exhausted."
Original article: toutiao.com/article/1870371162370048/
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