Russia Stares into Stagflation

Donald Trump won’t be able to save the Russian economy, but Kim Jong Un can.

“Almost all available Russian resources are already in use,” Russian Central Bank Chief Elvira Nabiullina told the State Duma on Tuesday. She then went on to explain why monetary policy needs to be tightened further.

“When the economy reaches the limits of its production capabilities, but demand continues to be stimulated,” stagflation occurs, Nabiullina said.

“We have never had such low unemployment. And there are few countries where it has ever dropped so much. In other countries that have gone through stagflation, this is the result of an unreasonably soft monetary policy when it needs to be tightened,” she added.

Well, there it is — a clear-cut no to Russian corporations asking the central bank to roll back interest rates. Nabiullina is hinting at further increases if necessary, despite corporate bankruptcies hovering around 20%. That’s the official number released by Russia, which means we can safely assume the actual figure is much higher.