Sep 9, 2021
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Siluanov called the risks of “permanent printing of money”

Soft monetary policy and money issuance (emission) threaten an economic crisis and higher inflation. This was stated by Russian Finance Minister Anton Siluanov at the Moscow Financial Forum, RBC reports. He called such actions contrary to economic laws.

“You can’t print money all the time and not pay for it,” Siluanov said. According to the minister, first of all, citizens with a small income will pay for the growth of inflation. “Any mistake here is a consequence on people’s incomes and well-being,” Siluanov said.

He called the continuation of this policy a dead-end path. The minister recalled that many countries decided to abandon the soft monetary policy, as they faced negative consequences. Inflation has increased in Canada and the rate of economic growth has decreased, although in 2020 the country’s budget has increased by one and a half times. In Turkey, after a soft budget policy, the lira exchange rate fell by a quarter, and inflation accelerated to 19 percent. The rapid rise in prices made the Turkish central bank’s real key rate negative. The minister called Russia’s approach to budget spending “balanced.”

Experts believe that the best way to protect savings from inflation is to store them in different currencies. “There can be a lot of ratios: 50-25-25, where 50 percent is set aside in rubles, and 25 percent – in dollars and euros,” says Nikolai Pereslavsky, an expert at the Department of Economic and Financial Research of the CMS Institute.

On Friday, September 10, a meeting of the Central Bank (CB) will be held on the key rate. Bloomberg analysts predict an increase of 0.25-0.5 percentage points – up to 6.75-7 percent. At the last meeting, on July 23, the Central Bank raised the key rate by one percentage point at once – up to 6.5 percent per annum. An increase in the key rate helps to curb inflation, since it affects the percentage at which banks issue loans to citizens. The higher the rate, the less money is in circulation.

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