Latest News

Russian reserve bank blames labor shortages, low rates, for financial investment slowdown

Russia's reserve bank on Thursday rebuffed complaints from companies about high interest rates rising financing expenses, specifying that labour lacks were the reason why financial investment growth was slowing throughout the economy.

The Bank of Russia last month treked its essential rate by 200 basis points to 21%, the greatest level considering that the early years of President Vladimir Putin's rule, as heavy state costs for the conflict in Ukraine tightens up the labour market, pushing up wages and inflation.

A growing number of commercial firms are stating that item financial investment and advancement may suffer.

Kirill Tremasov, head of the bank's financial policy department, acknowledged at a forum in the Urals city of Chelyabinsk that financial investment growth had slowed.

But he added: In principle, there are no available labour resources.

Most production and engineering companies say that attempting to compete with the military-industrial complex, which has actually been put into overdrive to gear up Russia for the dispute in Ukraine, is useless.

The majority are putting the advancement of new production capacity ... on time out specifically due to the lack of personnel, Tremasov stated.

Steelmaker MMK disputed that.

If we continue our financial investment programme at the volume we have now, then the money will run out in six months, stated Maria Ovechkina, MMK's head of funds.

The major service union RSPP said last week that late payments had been the prominent factor obstructing Russian companies in the third quarter, as companies face high rate of interest and logistics challenges.

But RSPP head Alexander Shokhin did acknowledge a labour scarcity.

The special (military) operation is diverting individuals, and this problem can not be fixed quickly, he said.

Tremasov duplicated the central bank's position that high borrowing costs will be needed for a long period of time to cool financial overheating.

He expected the essential rate to typical 17-20%, next year, warning that much more hawkish policy might be needed.

(source: Reuters)