Quote:
Originally Posted by pornmasta
now imagine the inflation that you need to handle that...
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If the fund rate is high, then it's harder for the russian banks to borrow money (more expensive at the russian central bank), so it's going to shrink the economy and that can generate a deflation that can block the economy.
If the fund rate is high, then it's easier for the russian central bank to borrow money outside of the country since it pays more. But if the russian economy is going to shrink, then it's gonna be harder for russia to reimburse its debt.
I guess that the outcome is also partially based on russia's real strength...