Putin on Erdoğan’s economic policy: If we didn’t raise interest rates, Russia would’ve ended up like Turkey

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Russian President Vladimir Putin expressed his acceptance of the “aggressive” policies of the Bank of Russia to curb inflation, during the press conference for 2021, while leaving tips for Erdoğan’s policy in Turkey.

“I know there is dissatisfaction in the real economy with interest rate hikes,” Putin said.

The Bank of Russia raised its key interest rate by 100 basis points in its last meeting of the year last week, bringing the total to 425 basis points in 2021.

It also warned that more increases may be needed to tame inflation which runs at 8.4%, more than double the original target of 4%.

Russia has avoided a crisis like the one that plagues Turkey.

The lira has lost about 50 percent of its value since September as President Recep Tayyip Erdoğan relied on the country’s central bank to cut borrowing costs, trying to to attract investment and support his declining popularity.

The key interest rate, after four consecutive reductions, has fallen to 14%, with inflation rising by more than 7 percentage points to 21.3%.

These moves have, of course, shaken investor confidence, while not offering the slightest guarantee in international markets.

“Unfair to blame us for prices in natural gas”

Putin said at another point in his speech that it is “unfair” to criticise Moscow for soaring gas prices in Europe, since “Gazprom fulfills all its obligations” for the supply of natural gas.

“Gazprom had to meet its obligations under long-term contracts before supplying gas to the spot market, and countries with long-term contracts – such as Germany – now have gas at much lower prices and can even resell gas in neighboring countries with a profit,” he said.

“Europe created its own problems with the gas and must solve,” Putin stressed, adding that he suspects that some amount of Russian gas eventually resold in Ukraine.

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