Inflation: the wild card in Russia's hand

Overview

Russia’s worsening inflation problem is driven by last year’s huge fiscal stimulus and the failure of the monetary authorities to sterilise inflows of private capital. With little prospect of fiscal tightening, monetary policy will have to bear the brunt of the burden in fighting inflation. This will require shifting monetary policy from a passive to an active role. There is no sign yet of the political will to make this shift and restrain the substantial price pressures in the...