Monetary Policy in Russia Reduces Economic Activity during the Period of its Growth – isn’t this a Success?

DOI: 10.33917/es-6.198.2024.48-55

The article dwells on the policy of the Central Bank of Russia to suppress inflation and ensure stable economic growth. The purpose of the study is to identify the impact of the key interest rate on inflation and economic growth in Russia, to specify the negative consequences of its increase. Methodology is based on the theory of monetary policy and economic growth. The overall result obtained is that the current policy of increasing the k ey interest rate in Russia has a negative impact on economic development and is less successful in suppressing inflation than some economists and analysts expect. Moreover, it slows down economic growth, reproduces the growth of inequalit y over a long period, revealing a weakly positive effect in influencing inflation and a negative cumulative ef fect on the rate of economic growth. The approach from the perspective of “distributed control” and the cumulative ef fect, used in the article, makes it possible to reveal the joint dynamics of a number of relevant parameters that characterize and reflect the content and ef fectiveness of monetary policy in Russia. The proposal is that various policy instruments should be subordinated to the task of the real economy growth, supplying it with financial capital, against which the policy of a debt economy with a high interest rate works.

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