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Emerging Europe Economics Focus

Emerging Europe Economics Focus

Will deficit financing trigger a surge in Russian inflation?

There are good reasons to think that monetisation of Russia’s budget deficit will not necessarily lead directly to a pick-up in inflation. But it adds to the downside risks facing the ruble. We expect the currency to fall by 10% against its dollar/euro basket over the next six months or so, breaching the current lower bound of its trading range.

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