Vladimir Putin 'scared about inflation' and the economy of Russia!

"In conditions of high inflation, it is practically impossible to make business plans."

by Sead Dedovic
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Vladimir Putin 'scared about inflation' and the economy of Russia!
© Sean Gallup / Getty Images News

As reported by Reuters, Russian President Vladimir Putin announced on Tuesday that rising inflation had forced the central bank of the country to raise interest rates to 12 percent in the last month, warning that the damage would be done to the Russian economy if price increases were allowed to spiral out of control.

As a result, the central bank's decision was necessary to protect the country's economy. It was not due to political interference. "In conditions of high inflation, it is practically impossible to make business plans."- the Russian president said at the Eastern Economic Forum.

A number of tools are available to the authorities to control the markets and the currency at the same time, and Putin believes there are no problems with the ruble's volatility. The Russians are aware of the problems they are in, and they had to come up with a solution.

However, many people wonder how long the Russians can endure the whole situation. Tuesday morning, the ruble hit its highest level in nearly six weeks against the dollar, boosted by a gradual increase in foreign exchange sales by exporters and the prospect of another rate increase from the central bank on Thursday.

Many are wondering if the government will take any steps in this case.

Vladimir Putin on ruble

According to Putin, the ruble exchange rate is affected by a variety of factors, including exporters' "limited" repatriation of foreign exchange earnings, but there won't be sudden jumps, referring to capital controls.

He pledged to continue measures to stabilize the exchange rate and to protect Russia's economy from external shocks. Putin always encouraged businesses to invest in Russia, saying the country was an attractive investment destination.

Tax increases are not needed by the government for now, he said. Several companies were taxed windfalls this year in order to increase the government's revenue. This has proven to be a successful strategy. This will help to create jobs, stimulate the economy, and protect small businesses.

It must be admitted that the Russians are facing enormous problems. Economists all over the world are questioning how long they can endure everything.

Vladimir Putin Russia
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