The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
Fitch Ratings has affirmed the United States' credit rating at "AA+" and stated that the country's fiscal profile is likely to remain largely unchanged regardless of the outcome of the upcoming presidential election. The agency cited structural strengths such as high per capita income and financial flexibility.
Key Takeaways:
Limited Impact from Election Results: Fitch believes that the underlying US fiscal position will remain stable despite different economic objectives, tax policies, and spending priorities of Democratic Vice President Kamala Harris and Republican candidate Donald Trump. It expects most of the tax cuts from 2017 to be extended under either administration, which would affect revenues and contribute to wider budget deficits.
High Deficits and Debt Burden: The US government has not taken significant steps to address large fiscal deficits, a growing debt burden, and increasing expenditures linked to an aging population. These factors place the US below the median of equally rated sovereigns. Despite these concerns, Fitch maintained the US rating due to its economic strength and the advantage of issuing the world's leading reserve currency.
Concerns Over Governance Standards: Fitch noted that US standards of governance are below those of its 'AA' rated peers. This follows the agency's downgrade of the US credit rating last year after political disagreements over the debt ceiling, which ended with an agreement to lift the government's $31.4 trillion borrowing limit.
Overall, Fitch's assessment suggests that while the upcoming election may shape certain policies, the fundamental fiscal challenges facing the US are likely to persist.
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