Russian Interest Rates Evinces Shortages (Supply Side)
Russian inflation does not result from excess demand from rising Russian incomes; on the contrary, Russian inflation is a supply-side issue connected with decreased productivity as more capital and people are channeled into the unproductive geopolitical event in Ukraine. Therefore, based on economic theory, we can extrapolate that there are already shortages in Russia that push the price level higher. Russian Central Bank's monetary policy will not fix this as it is not a monetary cause but a fundamental real sector issue; that is, there is not enough production of consumer and capital goods.