Russia: Policy Rate Up, Oil Prices Down

Growth prospects in short term are being revised up. But how long can that persist when policy rates rise, oil prices stay low?

First, the policy rate was moved up in December. They now rival the rates achieved at the beginning of Russia’s invasion of Ukraine:

Source: accessed 1/16/2024.

As the same time, oil prices that Russia obtains remain at about the level of the cap, $60/bbl.

Source: accessed 1/16/2024.

Russia’s trade balance has collapsed to about a quarter of what it was in the immediate aftermath of Russia’s expansion of its invasion.

Source: accessed 1/16/2024.

This result suggests financing of critical imports will become more difficult over time, given inability to borrow (and lack of access to frozen assets).


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