Russian Central Bank issues interest rate statement: Following a similar policy to Turkey's threatens economic stability

The Central Bank of Russia, which has been examining the economic problems created by the low-interest-rate policy in Turkey, has issued warnings regarding the potential consequences if such a policy were to be implemented in Russia. A report in the government newspaper Rossiyskaya Gazeta emphasizes that, especially during periods of high inflation, a sudden reduction in interest rates could have serious negative effects on the national economy.

According to the report in Türkrus, Central Bank official Alexey Zabotkin stated that lowering interest rates could cause inflation to rise rapidly. The newspaper writes that as a result of implementing this policy in Turkey, the inflation rate rose to 15 percent in 2020, 36 percent in 2021, and 64 percent in 2022. 

'FOLLOWING A SIMILAR POLICY TO TURKEY'S UNDERMINES CONFIDENCE IN THE CURRENCY'

According to Zabotkin, this economic situation in Turkey serves as a warning that if a similar policy were followed in Russia, citizens might withdraw their savings and increase their demand for consumption and credit, which would further fuel inflation.

The Russian Central Bank official stated that such a policy could threaten economic stability by undermining confidence in the national currency. He also noted that the business world could rapidly increase its raw material stocks during this process, which could in turn cause the prices of goods and services to rise rapidly. 

News Source: 12punto