Russian Economy General News: #10

miketheterrible wrote:Here are facts of info:

https://tradingeconomics.com/russia/disposable-personal-income

These numbers don't mean much without context. The trend in the west and in Russia has been for both the man and the woman to work.
In Russia both can find reasonably paying jobs since the real unemployment rate is about 4%. So you do not have millions of people
falling through the cracks and having to leech their relatives for support like in the USA. So f*cking what if the disposable income varies
from year to year. People still get money and can support themselves. Meanwhile, cherry picked US statistics ignore the zero income
millions since they are deemed to be "not looking" for work.

The Trading Economics website data is useful up to a point. Inflation in the second half of 2018 was less than 3%. This graph claims
that disposable income experienced falls of up to 3% even though the wage growth was not zero for these periods:

https://tradingeconomics.com/russia/wage-growth

I am having a hard time understanding why there would be monthly negative spikes of 3.1% in disposable income. Looks like BS to me
since there is no organized cost burden pattern. I mean things like housing costs (taxes, utilities) which go up at certain times of the year
instead of randomly.

miketheterrible wrote:

Hole wrote:Ah, statistics!

You can read even this statistic quite differently. 40% are "dissatisfied" means that 60% are OK with how their life is going. Or you can say that these 40% are not satisfied and want a better life = they will work harder, improve themselfs and get richer.

It actually said in the article too that many either went to find a new job or are going back to school in the article.

But Austin wants Russia to just hand out free money like Saudi Arabia does.

I rather give tax refunds instead

Opinion surveys in Russia are not going to measure the same thing as in the west. Pessimism is a national past time in Russia. So
when a Russian says he is unhappy, he really means that he wants pie in the sky happiness. This mass syndrome gives us the
extreme grass is greener BS view of the west which still persists to some degree. I say, instead of sitting on your asses and whining,
GTFO. Go to your precious western utopia and stop bitching about not getting everything you want out of life, without trying.

This mentality is the result of communism. Homo Sovieticus is an aggressive welfare bum with a pathological entitlement complex.
Thankfully, the brain damage in Russia is more limited than in Ukraine and elsewhere. I would ignore these 40% and let them
whine. Not even majorities in any given country get what they want and make the decisions. Some spoiled brat minority
for sure does not deserve such attention and power.

Good example

https://russia-insider.com/en/why-un-world-happiness-report-load-nonsense/ri26653

kvs wrote:

miketheterrible wrote:

Hole wrote:Ah, statistics!

You can read even this statistic quite differently. 40% are "dissatisfied" means that 60% are OK with how their life is going. Or you can say that these 40% are not satisfied and want a better life = they will work harder, improve themselfs and get richer.

It actually said in the article too that many either went to find a new job or are going back to school in the article.

But Austin wants Russia to just hand out free money like Saudi Arabia does.

I rather give tax refunds instead

Opinion surveys in Russia are not going to measure the same thing as in the west.    Pessimism is a national past time in Russia.   So
when a Russian says he is unhappy, he really means that he wants pie in the sky happiness.    This mass syndrome gives us the
extreme grass is greener BS view of the west which still persists to some degree.    I say, instead of sitting on your asses and whining,
GTFO.   Go to your precious western utopia and stop bitching about not getting everything you want out of life, without trying.

This mentality is the result of communism.   Homo Sovieticus is an aggressive welfare bum with a pathological entitlement complex.
Thankfully, the brain damage in Russia is more limited than in Ukraine and elsewhere.    I would ignore these 40% and let them
whine.   Not even majorities in any given country get what they want and make the decisions.    Some spoiled brat minority
for sure does not deserve such attention and power.

Well judging from what I could translate from article is that questioning was vague enough to get a vague response which then they cobbled together and made a claim. When really, it was not as black and white as Kommersant made it out to be. Respondents also doesn't translate to whole country. Instead, just their responders.

You are right about one thing for sure, socialist system did create a lot of Russians who want to be taken care of without putting in effort of their own.

I am happy to concede that the 40% number is too high and the actual malcontent figure is 10-20%. If you watch the weekly
Vryema Vperyod clip, the theme of pathological criticism of any economic activity in Russia is routinely highlighted. This is not
healthy self-criticism. This is rabid, delusional hysteria that belongs in some end of the world cult. The best approach is to
totally ignore these whiners and their foreign enablers.

kvs wrote:I am happy to concede that the 40% number is too high and the actual malcontent figure is 10-20%.   If you watch the weekly
Vryema Vperyod clip, the theme of pathological criticism of any economic activity in Russia is routinely highlighted.   This is not
healthy self-criticism.   This is rabid, delusional hysteria that belongs in some end of the world cult.   The best approach is to
totally ignore these whiners and their foreign enablers.  

As you may have noticed, we have similar morons in Canada. They are found everywhere.

This is funny.

https://sdelanounas.ru/blogs/118992/

Spanish confectioners choose Russian equipment

So I was just recently told that you "pay for quality" and that PPP doesn't matter and its all about nominal GDP.  YET, Russian products that never sold in Europe, are now selling in Europe.  Farming equipment is a good example.  Now this.

This product is cheaper for Europeans. And this creates work for Russian companies and brings money in which then allows Russians to pay for goods within the country. You know, in Rubles.

miketheterrible wrote:This is funny.

https://sdelanounas.ru/blogs/118992/

Spanish confectioners choose Russian equipment

So I was just recently told that you "pay for quality" and that PPP doesn't matter and its all about nominal GDP.  YET, Russian products that never sold in Europe, are now selling in Europe.  Farming equipment is a good example.  Now this.

This product is cheaper for Europeans. And this creates work for Russian companies and brings money in which then allows Russians to pay for goods within the country. You know, in Rubles.

You were being lectured by someone who has zero experience and even knowledge as pertaining to quality and utility of any of the products and services. Russian exports are sold abroad in other currencies but the companies selling them see the ruble revenues which is what matter to them. Not the opinions of expats 30 years out of touch with Russian realities.

Living in Canada it is common knowledge that Canadian exporters profit from reduction of the exchange rate. I guess in other parts of the world such basics are unknown and Canadian exporters must surely be suffering when the Canadian dollar drops. Since supposedly the exchange of the Canadian dollar to the US dollar scales the Canadian GDP up and down by 50%. Yeah, right.

miketheterrible wrote:So I was just recently told that you "pay for quality" and that PPP doesn't matter and its all about nominal GDP.

Who told you that? Just curious. Because that's not what PPP means. On the contrary, when PPP adjustments are made, the quality should be more or less identical between comparable products and services by definition. (And I know that you know that.)

So for example, this guy thinks Russia's overall economic output has collapsed since 2014 lmao? That with the ruble devaluation the "quality" of Russian products somehow decreased?

Or that this "quality" of American products suddenly massively improved, as USD has strengthened considerably against most other currencies as well since 2014? Or that Saudi Arabia is a military juggernaut? Yeah, obviously. I could go on and on... China's economic stagnation... was it in 2015 or 2016 is another good one, that is if you just look at short-term nominal GDP and exchange rates. Because yeah, that's totally what happened in the real world.  

Nominal GDP of course isn't totally useless either, but it's a flawed metric, to say the least.

EDIT: In short, as pointed out by kvs, exporters absolutely hate devaluations. Because, as everyone knows, that magically makes their products worse, and hence, less competitive. That's basic economics 101, people. (Said no one ever.)

Kimppis wrote:

miketheterrible wrote:So I was just recently told that you "pay for quality" and that PPP doesn't matter and its all about nominal GDP.

Who told you that? Just curious. Because that's not what PPP means. On the contrary, when PPP adjustments are made, the quality should be more or less identical between comparable products and services by definition. (And I know that you know that.)

So for example, this guy thinks Russia's overall economic output has collapsed since 2014 lmao? That with the ruble devaluation the "quality" of Russian products somehow decreased?

Or that this "quality" of American products suddenly massively improved, as USD has strengthened considerably against most other currencies as well since 2014? Or that Saudi Arabia is a military juggernaut? Yeah, obviously. I could go on and on... China's economic stagnation... was it in 2015 or 2016 is another good one, that is if you just look at short-term nominal GDP and exchange rates. Because yeah, that's totally what happened in the real world.  

Nominal GDP of course isn't totally useless either, but it's a flawed metric, to say the least.

EDIT: In short, as pointed out by kvs, exporters absolutely hate devaluations. Because, as everyone knows, that magically makes their products worse, and hence, less competitive. That's basic economics 101, people. (Said no one ever.)

The forum admin, Vlad. Everyone else tried reasoning and correcting him but he wouldn't have any of that. Oh well, it's his opinion vs majority of the world.

He is entitled to his opinion.

Most people are not so different... try to sell me on the idea that America is a source for good in the world... you could talk till you are blue in the face....

GarryB wrote:He is entitled to his opinion.

Most people are not so different... try to sell me on the idea that America is a source for good in the world... you could talk till you are blue in the face....

I don't know. Someone trying to ridicule the concept of PPP does not have a valid opinion and should not be running around
attacking those that understand the concept. People are entitled to their opinions but are not entitle to rub sh*t in the
faces of those that don't share ignorant opinions. People who are out of touch with reality but act as if they are the
best informed are fair game for ridicule. Only in subjectivist cultural Trotskyism that is infesting the west with PC dogma
is everyone's opinion of equal value without any objective metric for differences.

It is clear that this entitled opinion holder has no clue that Russians pay for goods and services in rubles and get salaries in rubles.
His whole line of attack is that Russians must be using dollars and dollar priced goods and services. Yeah, some entitled opinion that
is. This website must be some sort of honeypot with such operators.

https://rusvesna.su/economy/1555060959

Real incomes of Russians increased by 6.8% in 2018. But for anti-Russian propagandists this is equivalent to
a fall in incomes. Because like Karl Rove they get to create reality through the force of their will....

In January 2019 the real income growth was 1.1% and in February of 2019 it was 0.7%. So it looks like
the real income growth in 2019 will be over 6% as well. This is consistent with the fact that the actual
GDP growth in Russia grew by over 6% in 2018 and will grow substantially this year as well. All the capital
flight BS is essentially foreign debt repayments.

It is ludicrous that such payments are considered a negative term in GDP accounting. As if other contributions
to GDP are somehow reduced by debt payments. This is utter nonsense. And subtracting a hypothetical extra
contribution from the use of debt payment money for internal consumption from the rest of the GDP does not make
sense. This extra contribution is no part of the rest of the GDP. Foreign debt payments have zero current impact
on the GDP and actually have a positive delayed effect due to hypothetical internal consumption does increase
due to the offshore money flow for debt servicing being redirected internally.

kvs wrote:

GarryB wrote:He is entitled to his opinion.

Most people are not so different... try to sell me on the idea that America is a source for good in the world... you could talk till you are blue in the face....

I don't know.  Someone trying to ridicule the concept of PPP does not have a valid opinion and should not be running around
attacking those that understand the concept.  People are entitled to their opinions but are not entitle to rub sh*t in the
faces of those that don't share ignorant opinions.   People who are out of touch with reality but act as if they are the
best informed are fair game for ridicule.   Only in subjectivist cultural Trotskyism that is infesting the west with PC dogma
is everyone's opinion of equal value without any objective metric for differences.  

It is clear that this entitled opinion holder has no clue that Russians pay for goods and services in rubles and get salaries in rubles.
His whole line of attack is that Russians must be using dollars and dollar priced goods and services.  Yeah, some entitled opinion that
is.  This website must be some sort of honeypot with such operators.

What's even more funny is that the imported goods in Russia didn't double in price either even after exchange rates changed thus in Rubles, they paid at best 16% more which sucked but oh well. Example that was used was "but if you exchange from Rubles to Yuan's when you purchase in China they will laugh".... In ok. So don't go buy shit in China. Stay in Russia and buy goods in Rubles. Those same Chinese products will be in Russia at different rates anyway. I mean, I live in Canada. Wanna know how many times I went to US to buy shit? 3 times. Once in NY,then Florida and then in Montana. Woopeee. Was overpriced garbage (Sam Adams taste like shit and cost about $12USD per bottle). I am over 30 years old. So that says how often I traveled there per year....

Siluanov said that Russia has a "plan B" in case of sanctions against state banks

https://tass.ru/ekonomika/6330678

WASHINGTON, April 13th. / Tass /. Foreign investors are concerned about the possibility of introducing new sanctions against Russia, in particular in the banking sector, while evaluating the Russian economy as stable. First Deputy Prime Minister, Minister of Finance Anton Siluanov told reporters on the margins of the annual meeting of the International Monetary Fund and the World Bank.

"We had a meeting with investors, they say that they understand the Russian economy, everything is stable, no intrigue, except for sanctions, no. They asked what would happen if there were sanctions, how the government and the Central Bank would react if the package on bank sanctions will pass, "- said Siluanov.

According to him, he assured investors that the Russian Federation has a “plan B” in the event of the imposition of such sanctions, and also that the government and the Bank of Russia have the tools to support all customers of state banks. In particular, the opportunity to fully provide them with payments both in cash and non-cash forms, both in dollars and in national currency, the minister said.

Risks of a global recession

The risks of a global recession are very high in the long run, and Russia needs to build defenses in such a way as to counter these challenges, Siluanov said.

“The risks of a further global recession are very high,” he said. “Therefore, we, Russia, need to go counter-current. We need to start implementing national projects as soon as possible, we need to introduce more measures to liberalize our economy — currency legislation, repeal legal acts that hinder business. Now this is our agenda. "

The First Deputy Prime Minister stressed that investors rate the Russian economy highly, since Russia has a good macroeconomic base. “Similarly, we need to make as a response to all possible restrictions. We are ready to change energy prices - the budget is ready and reserves, and the balance of payments is such a system,” he said.

Siluanov pointed out that Russia has two serious sanctions risks - the introduction of restrictions on the new national debt and non-appeal of the old, as well as restriction on five state banks. "If they are realized, it will be unpleasant for us. We have budgetary balances, reserves have accumulated, the National Welfare Fund has accumulated, in case of a decrease in oil prices, we can use it. I am sure that we will find such volumes in the domestic market, "he explained.

The First Deputy Prime Minister recalled that the financial G-20 stated a slowdown in global growth by 0.4 percentage points, to 3.3%. The reasons for the decline, he said, were both objective and man-made factors. Siluanov said that objective measures to stimulate the world economy — such as easing monetary policy and fiscal policy — stopped working.

Manned factors, that is, the consequences of specific decisions, he called trade wars, cross-border restrictions, as well as political instability in a number of states, in particular, the British exit from the European Union (Brexit). “The Russian delegation said in its speech:“ Let's at least deal with man-made factors. ”Objectively, this should be solved within the framework of structural changes in each country,” Siluanov said.

Siluanov arrived in Washington to attend the annual meeting of the International Monetary Fund and the World Bank. The Russian delegation also includes the Central Bank Chairman Elvira Nabiullina, Deputy Finance Minister Sergei Storchak and Vladimir Kolychev, as well as the head of the Accounts Chamber Alexei Kudrin.

I don't know. Someone trying to ridicule the concept of PPP does not have a valid opinion and should not be running around
attacking those that understand the concept. People are entitled to their opinions but are not entitle to rub sh*t in the
faces of those that don't share ignorant opinions. People who are out of touch with reality but act as if they are the
best informed are fair game for ridicule. Only in subjectivist cultural Trotskyism that is infesting the west with PC dogma
is everyone's opinion of equal value without any objective metric for differences.

But if he is so totally wrong and the reasons are obvious surely it should be easy for someone to explain in fairly straight forward and simple terms the error of their understanding and why you are right.

Bullying or calling a student dumb is not a good way to teach... if an ass hole told me the sky was blue when I was not sure, if he abused me but didn't explain why he was right in terms I could readily understand, why would I give his BS a second thought... BTW it is not the end of the world to find out I have an eye or brain condition that leads me to see the colour blue differently from what you see... generally you are taught colours by comparison... this is blue, that is blue, those are blue... is this blue... well compared to these other things called blue then it is, but even then it could instead be a shade of blue green that is more green than blue... but still a little blue.

Of course Kudrin would end up going to the US for these meetings. He shouldn't be there, period. His job has NOTHING to do with economics. Just making sure budget money is spent correctly. I fucking hate this guys guts to the point I would be dancing if he was snuffed off.

But the rest of the article is fine I suppose. Although, these economic majors are complete and utter retards. They should have never moved an economy based upon FDI in the first place. It should have been entirely based upon its own resources like how China did it.

They should have never moved an economy based upon FDI in the first place. It should have been entirely based upon its own resources like how China did it.

Was that ever really the case, though? At least after Yeltsin and the very early 2000s. Russia was quite dependent on Western credit at one point, however.

What you said about China might come as a huge suprise to most people (and it's of course not the whole story), as the elite rhetoric almost everywhere is all about "globalization". But the reality, of large countries in particular, is a little different and more complicated.

miketheterrible wrote:Of course Kudrin would end up going to the US for these meetings.  He shouldn't be there, period.  His job has NOTHING to do with economics.  Just making sure budget money is spent correctly.  I fucking hate this guys guts to the point I would be dancing if he was snuffed off.

But the rest of the article is fine I suppose.  Although, these economic majors are complete and utter retards.  They should have never moved an economy based upon FDI in the first place.  It should have been entirely based upon its own resources like how China did it.

FDI in Russia has been at joke levels since before 1999. There is lots of talk about it and "capital flight" but that is full bore propaganda
BS since the western MSM and governments have spent 20 years scaring investors away from the Russian markets. By contrast, China
has been wallowing in "manna from Heaven" FDI since the early 1990s.

When Russian officials talk about FDI, they sound liked clueless idiots. No part of the Russian economy depends on FDI. And in fact,
most investment in Russia is portfolio capital that is both flighty and speculative. NATO morons think that Russia's economy is that
of an actual banana republic so every foreign dollar is precious. But that is merely delusion. Russia needs to worry more about foreign
debt which can be used to coerce it. You can tell from the scale of foreign debt repayments that this is vastly larger than any portfolio
investment which is yapped about incessantly as if it was long term FDI.

https://tradingeconomics.com/russia/foreign-direct-investment
https://tradingeconomics.com/china/foreign-direct-investment

(press on the MAX button)

FDI in Russia has averaged under 6 billion USD per year since 1994. The all time peak was in 2013 and the amount has fallen off since the 2014
sanctions. FDI before 2004 was negligible. Compared to China, FDI in Russia is trivial.

It is the fact that Russian companies have only managed to get affordable loans outside of Russia that is the real weakness in the financial
sector that can be exploited by NATO. This is the fault of Nabiullina and the monetarist clowns at the CBR. Even though inflation fell
to less than 3% in 2018, they are still foisting a prime rate over 7% on the Russian economy. The prime rate should be at most 3% and
this would give Russian companies the 4% loans that they have been getting abroad but now on the domestic market. In addition,
the demand for loans would finally grow the Russian banking sector into something substantial. It is a joke because nobody borrows from
it due to the absurdly high lending rates. (This applies to consumers since they are also not willing to get ass-raped for Nabiullina's sake).

Loans from Russian banks are still in demand but as you said, low due to high rates. Now, most rely on looking for investments from larger industries and state directly.

It's the wordings of it all that piss me off. "We will now.... We will now.... We will now" all the time since 2014 regarding of investments and using domestic sources. It's as if they are saying, every year for five years now, that they never did this before. It's as if they are forgetting about previous five years, or they are making it sound like it's a new thing, every year - thus making it look like they are actually doing something. I have a feeling most of the development in Russia and it's hard work is entirely from: Rostec, Putin's overlook, Ministry of Industry and Trade and individuals all around the country. All the while the Ministry of Finance and the central bank does absolutely jack shit.

Central Bank sees more prerequisites for lowering rates, Nabiullina said

WASHINGTON, Apr 13 - RIA Novosti, Ekaterina Sobol, Alexey Bogdanovsky. Prerequisites for reducing the key rate of the Central Bank are currently greater than for raising it if the macroeconomic situation develops in line with the regulator’s baseline forecast, said Bank of Russia chairman Elvira Nabiullina on the margins of the spring meeting of the IMF and the World Bank in Washington.

The Bank of Russia at the end of March retained the key rate at the level of 7.75% per annum. In a press release, the Central Bank indicated that as the situation evolves in accordance with the baseline forecast, the regulator assumes a transition to a reduction in the key rate, that is, a softening of the policy, in 2019. However, then the Central Bank did not specify the period of the possible beginning of the reduction in the key rate, except for the generally designated 2019. The next meeting of the Board of Directors of the Bank of Russia, which will consider the issue of the level of the key rate, is scheduled for April 26, 2019.

"If the situation develops in accordance with our basic forecast, then, of course, the downward movement is more likely than the upward movement. I repeat once again that we see the possibility of mitigation already this year. We cannot say exactly when," said Nabiullina .

"We see the likelihood of a rate cut this year, in 2019, but we can’t say for sure when this will happen. We depend on the data that will be received here," Nabiullina answered the question of what period in 2019 could start mitigation policy.

"We must carefully look at current inflation and inflation expectations, how the economy behaves, how external factors will manifest themselves. If everything goes according to our forecast this year, but without specifying when", - again she noted.

https://ria.ru/20190413/1552666990.html

miketheterrible wrote:Loans from Russian banks are still in demand but as you said, low due to high rates.  Now, most rely on looking for investments from larger industries and state directly.

It's the wordings of it all that piss me off. "We will now.... We will now.... We will now" all the time since 2014 regarding of investments and using domestic sources. It's as if they are saying, every year for five years now, that they never did this before.  It's as if they are forgetting about previous five years, or they are making it sound like it's a new thing, every year - thus making it look like they are actually doing something.  I have a feeling most of the development in Russia and it's hard work is entirely from: Rostec, Putin's overlook, Ministry of Industry and Trade and individuals all around the country. All the while the Ministry of Finance and the central bank does absolutely jack shit.

I agree. They sound like clueless, incompetent idiots. The behaviour of the CBR is Putin's biggest fail so far. It is ironic since he oversaw
a much more rational pattern of interest rate and money policy since 1999 until the appointment of Nabiullina. She is getting credit she
does not deserve. It is not her absurd interest rates that are controlling inflation:

1) due to high inflation and interest rates since 1998, Russian bank loans have not been a substantial factor in both business
and consumer finance activity

2) so constricting the generating of loans, which is what the high prime rate does, is not impacting the flow of money like
it would in financially developed western countries with dominant domestic loans to business and consumers

3) there is no indication of an overheated Russian economy where there are too many rubles chasing too few goods
and services, in fact, due to the continuation and actual aggravation of the high interest policy that the CBR has pursued since
the late 1990s, coupled with NATO financial sanctions there is a shortage of money in the Russian economy.

4) thus, the inflation in Russia is negligibly affected by the CBR's prime rate policy and instead the CBR is suppressing
Russian economic activity and GDP growth

dino00 wrote:Central Bank sees more prerequisites for lowering rates, Nabiullina said

WASHINGTON, Apr 13 - RIA Novosti, Ekaterina Sobol, Alexey Bogdanovsky. Prerequisites for reducing the key rate of the Central Bank are currently greater than for raising it if the macroeconomic situation develops in line with the regulator’s baseline forecast, said Bank of Russia chairman Elvira Nabiullina on the margins of the spring meeting of the IMF and the World Bank in Washington.

The Bank of Russia at the end of March retained the key rate at the level of 7.75% per annum. In a press release, the Central Bank indicated that as the situation evolves in accordance with the baseline forecast, the regulator assumes a transition to a reduction in the key rate, that is, a softening of the policy, in 2019. However, then the Central Bank did not specify the period of the possible beginning of the reduction in the key rate, except for the generally designated 2019. The next meeting of the Board of Directors of the Bank of Russia, which will consider the issue of the level of the key rate, is scheduled for April 26, 2019.

"If the situation develops in accordance with our basic forecast, then, of course, the downward movement is more likely than the upward movement. I repeat once again that we see the possibility of mitigation already this year. We cannot say exactly when," said Nabiullina .

"We see the likelihood of a rate cut this year, in 2019, but we can’t say for sure when this will happen. We depend on the data that will be received here," Nabiullina answered the question of what period in 2019 could start mitigation policy.

"We must carefully look at current inflation and inflation expectations, how the economy behaves, how external factors will manifest themselves. If everything goes according to our forecast this year, but without specifying when", - again she noted.

https://ria.ru/20190413/1552666990.html

More talk from the frauds at the CBR. They simply do not have the control of inflation that they claim. See my previous post. If there were no sanctions
Russian companies would be getting loans abroad which would completely bypass the CBR prime rate "control". And consumer lending from Russian banks
is nowhere developed and substantial enough to regulate domestic spending. Thanks to NATO sanctions, the CBR is achieving a suppression of GDP growth.

But it is not at all obvious that even this is actually controlling inflation since high lending rates can actually stimulate inflation. That's right, this "paradoxical"
behaviour is why Central Banks and Governments have had almost no success in controlling inflation around the world (cf. 1970s Latin America, USA and Europe).
If inflation dynamics were a trivial single parameter (interest rate) forced-damped system then adjusting the lending rate would have a single signed impact on
inflation and would actually regulate it in a tight fashion. But we do not have a single signed control process and in fact have an unstable system where the
control can amplify the unwanted signal instead of damping it. Welcome to the real world.

Let me be devils advocate and side with the CBR

The role of the CBR is to maintain macro economic stability and control inflation.

If CDR reduces the interest rate matching claim inflation of 3 % then this will significantly affect the Savers Class in Russia , Savers need 3-4 % more in interest rate over the claimed inflation rate that is prevailing in any country.

So a 7-8 % rate of interest is helping the savers save and earn more but it is not helping much the industralist who take loans and has been blocked from taking loans abroad

To take care of this the Russian government but independenly of CBR provide loans to SME and bigger industry at attractive rate may be 5 % , The other option to stimulate the economy like the way they are doing by National Programs invesitng in Infra , Healthcare , Education etc

Currently the CBR has to also take care of known challenges like Sanctions on 4-5 Big Russian Banks and Ban on investing on Russian Bond plus who knows what else will those Rossophopic congress will pass but also Known Unknows like Weak Economy Globally , Rise in Debt Globally specially EU and US where Debt is out class growth roughly 2:1 , Finance Minister has already Hinted at IMF that there are imminent sign of Global Recession , Plus CBR has to account for Oil Price Fall in some known or unknown extraordinary circimstances.

The Russian Government as a whole gives Macroeconomic Stability and Inflation control a priority as a whole over GDP Growth , They dont want to even Increase their Debt beyond 18-20 % of GDP in the next 6 years ......... CBR is just doing what the Russian government priorities are.

Putin said he is targetting a growth of atleast 3 % in the next 6 years starting 2020 and 4 % if better conditions prevail.

CBR can look into rate reduction post 2020 when Sanctions and perhaps other shocks will diminish and lower interest rate of 5-7 % is possible. Assuming the Macroeconomic Stability remains and inflation is around 3-4 %

Right now CBR has a tough job and it is trying what it can i.e being conservative to prepare itself for worse days ahead.