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Vladimir Putin now turns to ruble and ballot to shore up authority

The Bank of Russia's emergency interest rate hike this week was not just a response to the latest fall in the ruble but part of a wider effort to subdue inflation before the vote

Russian President Vladimir Putin

Vladimir Putin

Bloomberg

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The ruble is slumping, the shock of a failed mutiny has yet to fade and the war in Ukraine has crossed the 18-month mark with no end in sight. 

Yet preparations are already underway for Vladimir Putin to secure a fifth term in March 2024 elections, even as anxiety about the future spreads among senior officials and business tycoons, according to four people close to the Kremlin.

The Bank of Russia’s emergency interest rate hike this week was not just a response to the latest fall in the ruble but part of a wider effort to subdue inflation before the vote, said one of the people and a second person close to the government. 

Without the election to consider, the central bank may have waited for the next scheduled monetary policy meeting to take action. As it stands, it’s facing open pressure from Putin’s aides to stabilize the exchange rate and prevent any further erosion of real household incomes. 

The government is also working on a three-year budget plan that will offer pre-election sweeteners including additional stimulus measures that could contribute to inflation, one of the people said, adding to the urgency to get the ruble under control. “Domestic political considerations favor tighter monetary policy,” said Alexander Isakov, Russia economist at Bloomberg Economics.  “If the ruble were to continue losing value it would have lifted inflation by 1-1.5 percentage points with price growth peaking at exactly the wrong time —  in the run up to March elections.”

Though few see any immediate threat to his grip on power, Putin’s authority as a guarantor of stability has taken a big hit in the wake of the mutiny by Yevgeny Prigozhin, leader of the Wagner mercenary group.
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First Published: Aug 20 2023 | 10:57 PM IST

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