Russia raises interest rate to 13% as economy struggles

The Central Bank of Russia raised its key lending rate by one percentage point to 13% on Friday, a month after imposing an even larger hike.

Transcript

00:00 Vladimir Putin insists the Russian economy is stable and reliable, despite Western sanctions,

00:06 high inflation and the weak ruble.

00:09 On Friday, the Central Bank raised interest rates to 13 percent, and economists warn there

00:14 are fundamental problems lurking below the surface.

00:17 "The Russian economy is working to the limit, to the absolute limit of its capabilities,

00:26 and this can be checked primarily by the fact that it is unemployed.

00:32 It is at historically low levels, which means that there is literally no one to work in the country.

00:38 And when there is no one to work, it means that the production capacity is overloaded

00:42 to the point where it is impossible to work.

00:45 Therefore, the Russian economy is trying to overcome the pressure it has faced

00:52 after Vladimir Putin decided to trade with Ukraine."

00:56 Economists are also concerned about inflation forecasts,

01:00 which look unreasonably optimistic, and the income situation.

01:04 With the sanctions, the massive revenues from oil and gas have declined.

01:08 "I think it will be worse, because, first of all, we can see from the trade balance

01:16 that export revenues are seriously declining.

01:23 Export revenues from oil sales are our main source of income,

01:35 and these revenues have already decreased by about 40-45 percent.

01:42 And it looks like this trend will continue."

01:49 Imports are a problem too.

01:51 Last month, the weak ruble fell to 100 against the dollar for the first time,

01:55 meaning imports are now more expensive.

01:58 And yet the Russian government recently improved its forecasts for economic growth for 2023 to 2.8 percent.

02:05 (car honking)

02:07 [SWOOSH]