Russia's Shock Decision - Joe Blogs

Russia’s central bank has reduced interest rates by 50 basis points, taking the key rate to 16% — a decision that has raised questions about whether this move is sufficient given the current state of the Russian economy.

In this video, I look at why such a modest rate cut may struggle to address some of the deeper issues Russia is facing, including persistent inflation, rising food prices, and growing pressure on household budgets.

I cover:
• Why a 0.5% rate cut may have limited impact on economic activity
• How compound inflation over the past five years has significantly increased everyday prices
• Why many Russians feel that food prices are rising faster than the official inflation rate
• What people said directly to Putin during his recent phone-in about the cost of living
• How wage growth compares with inflation once real purchasing power is taken into account
• The difficult balancing act the central bank faces between inflation control, the ruble, and economic growth

Using a simple example, I show how prices have risen by over 50% since 2020, while real wages have increased by far less — helping to explain why concerns about the cost of living remain widespread.

The key question is whether this cautious approach reflects confidence that inflation will continue to ease, or whether it highlights the limits of what monetary policy can realistically achieve in the current environment.

Chapters:
0:00 Intro
1:06 INTEREST RATES
4:27 INFLATION
9:21 COST OF LIVING
12:37 FOOD INFLATION
14:16 PRODUCER PRICES
16:43 GDP
17:58 SUMMARY & CONCLUSION