Inflation, not liquidity, is the real problem

The credit crunch spreads east

By March this year, monthly inflation in Russia had crept up to an annualized rate of 13.3%. While the central bank has drawn praise for its speedy and attentive approach to reassuring the supply of liquidity to the banking system, it might be that it is fixing the wrong problem. Caught up in the national campaign to boost growth and take GDP per capita from $13,700 today to $30,000 by 2020, the central bank and the government seem to be ignoring inflation and perhaps storing up greater problems ahead.