Page 20 - Russia OUTLOOK 2022

the financial markets.
The CBR was afraid that inflation expectations amongst the population had become unanchored and started an aggressive policy of rate hikes throughout the year. While the headline rate was around 8% in the autumn the population - especially those with no savings at the bottom end of the social strata, were expecting and experiencing inflation in the low to mid-teens.
Economists are arguing that high inflation is here to stay after a decade of low inflation and that a new business cycle has begun. Central banks need to abandon the idea that inflation is transitory, and the recent comments from Fed Chairman Jerome Powell suggest that this is already happening. Once central banks start rate hikes, they are going to have to move swiftly, since by that time inflation will have been above target for quite a while.
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