Free cash gained’t make individuals wealthier – Russia’s Central Financial institution – #INA

Handing out free cash to individuals won’t make them richer and shall be unhealthy for the economic system generally, Russia’s Central Financial institution has stated in response to a query about inflation.

The monetary regulator posted a short lesson in economics on its Q&A bit on Telegram, in response to a query, “Why can’t you simply print some cash and hand it out to everybody?”

“When asking this query, you most likely meant that when you print the cash and hand it out to all residents, they are going to all change into wealthier,” the financial institution stated, including that “such logic doesn’t work for the economic system as a complete.”

“Let’s think about that the state will print some cash and provides every citizen 1,000 rubles ($10). Nonetheless, at that second, the variety of items within the economic system won’t enhance. Which means that the availability of products will keep the identical, whereas the power to purchase them will develop momentarily,” the financial institution added.

The result’s apparent: the sellers will merely jack up the costs. We will purchase the identical quantity of products however will want more cash. In different phrases, mass handouts of cash don’t make individuals climate and solely drive up inflation.

The Russian economic system has managed to adapt itself to sweeping sanctions imposed on Moscow by Western international locations and their allies in response to the battle in Ukraine.

President Vladimir Putin stated throughout his end-of-the-year information occasion earlier this month that inflation poses “sure challenges” and stays the main focus of the federal government. One of many urgent points is the rise of meals costs, particularly for greens, eggs and dairy merchandise.

Russia’s inflation charge hover barely above 9%, with the GDP rising by 3.6% in 2024, Putin stated.

In October, in an effort to curb inflation, the Central Financial institution raised the benchmark rate of interest to a file 21%.

Free cash gained’t make individuals wealthier – Russia’s Central Financial institution





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