.news from RussiaRussian Economy Defies Cooling Effect of 16% Key Rate Increase, Continues Growth: VTB Deputy Chief
April 25, 2024 at 03:51 AM
Photo: rbc.ru
The Bank of Russia’s increase in the key rate to 16% has not had a cooling effect on the Russian economy, with its growth continuing despite the tightening of monetary policy, according to Dmitry Pianov, the first deputy chairman of VTB. Pianov believes that the current rate can be considered low for a «new type of transformational economy», - although just a few years ago a rate of 16% would have been sufficient to restrain GDP growth and lending. «Unfortunately, the 16% rate is not sufficiently cooling in an economy that, in defiance of, according to the Janibekov effect, continues to move towards very high growth rates. And here the Central Bank is in a dilemma: it cannot raise the rate from 16%, it has given enough signals that this is the maximum», - said the first deputy chairman of VTB.
The reference is to the theorem of the instability of the rotation of a rigid body about its second principal axis of inertia, a phenomenon noticed by Soviet cosmonaut Vladimir Janibekov in June 1985. «[Janibekov] discovered an effect during one of his expeditions — by unscrewing the nuts securing the cargo in orbit, he found that the nut changed the direction of its movement by 180 degrees without any external forces, then flew the next 40 centimeters and again changed the direction of its movement without any signs of external forces. That is, despite this cooling impulse, the Russian economy continues, due to certain properties, due to the 'inertia of mass,' as with this nut, to demonstrate, extraordinarily, higher growth than the Central Bank predicted, and, perhaps unexpectedly for the Central Bank, continue to show no signs of cooling», - Pianov said. He compares this to the situation in the economy at the end of 2023 — beginning of 2024. The Bank of Russia began raising the key rate in July of last year and in December raised it from 7.5% to the current 16%. The rate has not been revised at the last two meetings, the next meeting will be held on April 26, and analysts believe that the Central Bank will once again keep the rate unchanged.
The reference is to the theorem of the instability of the rotation of a rigid body about its second principal axis of inertia, a phenomenon noticed by Soviet cosmonaut Vladimir Janibekov in June 1985. «[Janibekov] discovered an effect during one of his expeditions — by unscrewing the nuts securing the cargo in orbit, he found that the nut changed the direction of its movement by 180 degrees without any external forces, then flew the next 40 centimeters and again changed the direction of its movement without any signs of external forces. That is, despite this cooling impulse, the Russian economy continues, due to certain properties, due to the 'inertia of mass,' as with this nut, to demonstrate, extraordinarily, higher growth than the Central Bank predicted, and, perhaps unexpectedly for the Central Bank, continue to show no signs of cooling», - Pianov said. He compares this to the situation in the economy at the end of 2023 — beginning of 2024. The Bank of Russia began raising the key rate in July of last year and in December raised it from 7.5% to the current 16%. The rate has not been revised at the last two meetings, the next meeting will be held on April 26, and analysts believe that the Central Bank will once again keep the rate unchanged.
By Igor Tarasov and Oxana Liu
