They say that high interest rates increase laos telegram data companies’ costs and further accelerate inflation…
— Definitely not. For the vast majority of companies, the impact of interest rates, the contribution of interest expenses to the overall cost structure is significantly less than the costs of raw materials, materials, equipment and labor. This is true for large, medium and small businesses. When demand in the economy is too high, competition for resources intensifies between companies. And then a vicious circle arises, when wages and prices for raw materials, materials and equipment grow rapidly.
And sellers continuously shift additional
costs to the prices of final products, since high demand allows them to do so. And this is the main mechanism of the “inflationary spiral”. By raising the rate, we break this vicious circle, restraining final demand. Then sellers will no longer be able to constantly raise prices, shifting their costs to the consumer. Yes, this can reduce business profitability somewhat. But this happens in any country when inflation slows down.
Inflation devalues both income and savings
— The Central Bank is often accused of slowing down the Russian economy…
— A tight monetary policy (i.e. a high key rate
— Ed.) does not slow down the economy, but limits excessive growth in demand. That is, such demand that exceeds the supply does it actually pay off to add cro to my sem process? capabilities — production or import. Because ultimately, such an imbalance will not increase real ao lists consumption of goods and services. People will not be able to buy more clothes or food. Everything will simply become more expensive. Rising prices will devalue both income and savings.
