Macroeconomics
The key rate, inflation, GDP and the rouble: how decisions at the Bank of Russia reach your portfolio.
20 articles
Bank of Russia meeting on 23 October: what usually happens nextStraight to the point: on Friday, 23 October, the Bank of Russia's board of directors announces its key rate decision, and what follows is almost always the same sequence of events. The market reacts not to the figure itself but to the gap between the decision and what is already priced in; the first to be repriced are sh…5 min
The wage-price spiral: what has to line up for the loop to closeA wage-price spiral is a self-reinforcing feedback loop in which rising pay pushes up companies' costs, companies pass those costs on in their selling prices, a more expensive consumer basket drives workers to demand compensation, and the cycle repeats.5 min
The zero lower bound: why interest rates hit a floor and what central banks use insteadThe zero lower bound is the level below which a central bank cannot push its nominal policy rate without triggering a flight into cash.5 min
Deficit monetisation: how government debt turns into money in the economyDeficit monetisation means covering the gap between budget spending and revenue with money created by the central bank, rather than with taxes or with savings borrowed from the private sector.5 min
Vacancies per one unemployed person: how labour shortages feed through to interest rates and profitsThe "vacancies per one unemployed person" indicator is the ratio of the number of open jobs to the number of people looking for work.5 min
Primary Budget Deficit: What Remains Once Debt Interest Is Stripped OutThe primary budget deficit is the gap between government revenue and spending, calculated without the cost of servicing the debt.4 min
The inventory cycle: why warehouses move output more than demand itselfThe inventory cycle is a swing in production that arises not from a change in demand but from the way firms adjust their stocks to it.5 min
Automatic stabilisers: how the budget dampens the cycle without new decisionsAutomatic stabilisers are the parts of the tax and spending system that change the direction of money flows between the state and the economy on their own as the cycle turns, without new laws being passed and without a separate decision by the government.5 min
Labour force participation rate: why it can fall alongside unemploymentThe labour force participation rate shows what share of the working-age population is present in the labour market at all, either employed or looking for work.5 min
Real disposable income: what exactly is deducted and what it is divided byReal disposable income is the population's money income minus mandatory payments and contributions, then adjusted for the change in consumer prices.5 min
The consumer basket: whose shopping list Rosstat measures and why it isn't yoursThe consumer basket is not a shopping list for getting by — it is a set of weights.5 min
Wage indexation: who is required to index pay and why it shows up in interest ratesWage indexation is the pay increase required by Article 134 of the Labour Code in response to rising consumer prices: it restores the purchasing power of a salary already agreed, rather than rewarding performance.5 min
Crowding Out: How Government Borrowing Raises the Cost of Money for BusinessThe crowding-out effect is a situation in which debt-financed government spending reduces private investment instead of adding to it.5 min
Net international investment position: who is whose creditor, and why it is not debtThe net international investment position (NIIP) is the difference between the value of a country's residents' external assets and the value of their liabilities to non-residents at a specific date.5 min
Okun's Law: How Unemployment Translates into Lost Output and Where the Translation Breaks DownOkun's law is an empirical ratio between how far unemployment has deviated from its natural rate and how far output has deviated from its potential.5 min
External debt: who owes non-residents and why it weighs on the exchange rateExternal debt is what a country's residents owe to non-residents: not "government debt" and not "foreign-currency debt", but debt defined by who the creditor is.5 min
Seigniorage: who pays for the issue of money and how it reaches OFZ yieldsSeigniorage is the income an issuer earns from the very act of creating money: the difference between the purchasing power of the monetary liabilities it issues and the cost of issuing them.6 min
The Taylor rule: how the policy rate is derived from the inflation gap and the output gapThe Taylor rule is a formula that suggests what a central bank's key rate should be, given the deviation of inflation from target and the deviation of output from potential.5 min
The savings rate: what goes into the calculation and why it moves interest rates and the debt marketThe savings rate is the share of household disposable income that was not spent on final consumption during the period.6 min
Macroprudential measures: how the central bank slows lending without touching the key rateMacroprudential measures are a set of tools the Bank of Russia uses to make particular types of lending more expensive for a bank in capital terms, or to cap the share of risky loans outright, without changing the key rate.5 min