“They [the authorities] should show that they take necessary measures to curb the inflation,” said Vladimir Sokolov, the member of the board of directors of VTB Bank Europe and the former head of the Russian Central Bank’s department of financial transactions. According to him, “it’s necessary to peg the ruble by 20 percent to overcome the inflation.”
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Ruble strengthening means that Russian manufacturers will gain less profit from export goods, and 100 dollars a barrel mean a fewer price in Russian rubles. However, oilmen claim that they suffer from the inflation greatly as well.
Russia ’s largest oil company Rosneft has already suffered from the growth of prices and expenses: the equipment became much more expensive, infrastructure costs and salaries went up, said the company’s financial director Peter O’Brian. Since 2000 salaries in dollars have doubled. “Inflation is painful,” he said. “If it goes on, producers of natural resources may no longer remain competitive on the global market.” Besides, the economists polled by Bloomberg forecast that by the end of this year oil prices will decrease from 116 dollars to 90 dollars a barrel.
Thus, it will be quite an undertaking for the Putin government to keep the balance between strengthening the ruble to curb the inflation and evading the damaging aftermath to Russian exporters from these actions, analysts consider.
The US economy has entered the phase of “a very sluggish fall” that may last up to the end of the current year, Alan Greenspan, the former head of the Federal Reserve System, told Bloomberg.
The USA is going thorough the phase of “fall, however, it’s a very sluggish fall, for there is no expected reduction in jobs,” Greenspan underlined.
Simultaneously, he stated that it is too early to say that the credit crunch set off by the US mortgage crisis is over. “It’s impossible to defuse the crisis until prices on the US housing market are stabilized,” Greenspan said.
Moreover, he argued that the global economy had faced inflation again. The inflationary pressure rises, for it is indispensable to add growing salaries of most countries to the highly increased food prices.
Now Greenspan is the leading consultant of the world’s largest financial institutions, including Deutsche Bank.
Translated by Julia Bulygina
Pravda.ru
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