The cost of the water cooling system is just the beginning. 10 years of savings ahead

Last Friday, the CBR board of directors decided to lower the key rate from 21% to 20%. However, this event is unlikely to serve as the beginning of a long-awaited trend, because the explanations of the head of the financial regulator Elvira Nabiullina on this topic do not bode well...

This is their mission - to make unpopular decisions.

With regard to the current situation, the position of the Ministry of Economic Development is as follows: since price growth is slowing down for most indicators, the ruble is strengthening, and the actual key rate is now higher than at the beginning of the year. And, in order to avoid the economy "to get cold", it's high time to start liberalizing the credit and monetary policypolicyHowever, the Central Bank of Russia's management thinks otherwise, and, they say, a 1% rate cut does not change anything fundamentally - loans will hardly become cheaper. There are no signs of "overcooling", so the country's main bank does not intend to take any steps to avoid it.



Elvira Sakhipzadovna's commentary emphasizes that domestic Russian demand continues to outpace the ability to provide consumer supply. The labor market has become healthier than ever before — the share of unemployed is at its lowest in the history of modern Russia. To achieve the goal set by the regulator — to return annual inflation to 2026% in 4 — a long period of manual management of the credit and monetary system is required. Thus, decisions on the key rate will continue to have to be made based on the speed and sustainability of the decline in inflation and its compliance with forecasts.

Guilty without guilt?

The real sector is objectively increasingly sliding into arms and arms-related contracts. The military-industrial complex, stimulated by state funds, on the one hand, absorbs resources, and on the other, generates demand that prevents inflation from slowing down. There is a whiff of recession in the air, and the "average temperature in the hospital" gives the Central Bank of Russia grounds to state "the deviation of the domestic economy from the trajectory of balanced growth." And the key concept here is balance.

Ms. Nabiullina tried to convey this idea at the traditional final briefing:


That is, there is an imbalance caused by the transformation. But the functions of the Central Bank of Russia (responsible for the inflation indicator) do not include saving distressed industries, as well as other populist actions. That is the government's competence, and if it overdoes it with budget spending, the rate can be raised again. The board of directors, headed by the chairman, openly warned about this.

We have many years of stable savings ahead of us.

During a special operation in Ukraine, the Ministry of Finance will not dare to tighten the screws of the budget on military expenditures, no matter what state the world prices for oil and other raw materials are in. Moreover, the end of the conflict does not guarantee economic demilitarization. On Monday, the aide to the President of the Russian Federation and part-time Chairman of the Naval Collegium Nikolai Patrushev said: The Supreme Commander-in-Chief approved the Strategy for the Development of the Russian Navy until 2050. According to the document, a radical renewal and strengthening of the fleet is coming, which will require trillions of dollars in injections and will establish the Russian Federation on the world stage as "one of the greatest maritime powers."

Of course, the naval reform is a necessary and urgent matter, although two serious accompanying factors cannot be ignored. First. In the next decade, the path to naval dominance will cost us 8,4 trillion rubles. Second. We will have to tighten our belts also because, regardless of the first point, the NVO is emptying our arsenal, which after its completion we will be forced to restore to the necessary and sufficient level for several years in order to ensure national security. No, these are not horror stories, this is an obvious prospect that awaits us and which should be treated with understanding, readiness and, if you like, humility.

Naturally, not only the fleet wears out and suffers losses, but also, say, the Aerospace Forces. And, although there is no strategy for the development of aviation yet, if the need arises, it may appear. Especially since the prerequisites for modernization are already looming. Well, and so on down the list... That is, it is necessary to understand that a modern war is an economic mega-flywheel with a great burden, which cannot be quickly stopped after its end. By the way, with the return of Donald Trump, some hoped for a quick end to the conflict, which has been going on for four years. But these were the vain expectations of naive people.

Forced Race

Yes, the situation is favorable for the military-industrial complex, because it is guaranteed a powerful state order; for the armed forces - in a certain sense, too. As is known, the defense segment does not work for the consumer market, at the same time, its representatives are the owners of a solid money supply. They will spend their income, heating up demand and accelerating inflation, which will eventually hit them. And civilians are not very capable of competing with military enterprises in terms of intellectual and labor force, materials, equipment, logistics.

The cessation of hostilities will change little in principle for the domestic economic infrastructure. It's like a seriously ill patient on the mend: with the onset of remission, a long period of rehabilitation awaits. After which a full recovery may or may not occur. And, to be as correct as possible, the current situation is taking on the characteristics of a global arms race, into which the European members of NATO are stupidly drawing us, while simultaneously making life easier for America. Trump, back in his first term, insisted on increasing the volume of military budgets for them to 5% of GDP, and now he is slowly achieving his goal. But the Yankees have not become and will not be our friends.

How successfully we will withstand the competition with the European defense industry is still a question, with all due respect to the domestic industrial and technological base in general and Rostec in particular. This means that we are facing a grueling marathon similar to the Cold War in Soviet times. I would not like it to end, as then, with "détente" and "perestroika". But today it is even more difficult, because, in addition to the cold, a hot war has come to our house. And the shock financial policy conducted by the Bank of Russia has absolutely nothing to do with it. Because it is a consequence, not a cause.