THREE ASPECTS OF THE CRITICAL ANALYSIS OF THE BANK OF RUSSIA’S ACTIVITIES
Vladimir Z. Balikoev
Novosibirsk State University of Economics and Management, Novosibirsk, Russian Federation
Keywords: key rate, nature of inflation, targeting, level of monetization, expensive money policy, money supply, non-monetary base of inflation
Abstract
The article analyzes the policy of the Central Bank of Russia in three aspects: setting the key rate, the low level of monetization of Russia’s GDP and determining the causes of inflation. The transition of the Bank of Russia from a liberal to an ultra-liberal policy is proved, expressed in the policy of targeting inflation, the floating exchange rate of the ruble and the liberalization of cross-border capital flows. The logical error of the Central Bank in determining the consequences of raising the key rate is shown. It rises to stop the inflation of demand, and thus causes the inflation of production costs. As a result, the opposite effect is achieved - an increase in inflation. The same process is facilitated by maintaining a low level of GDP monetization and incorrectly determining the causes of inflation in Russia, which is non-monetary in nature in the country. The author concludes that in its policy of expensive money, the Central Bank relies more on political factors than economic ones.
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