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...
The European Union (EU) has decided to move forward with higher tariffs on electric vehicles (EVs) from China, intensifying trade tensions between the two economic powers. The new tariffs will peak at 45%, with the levies depending on the manufacturer and ranging from 8% to 35% on top of the existing 10% rate. The tariffs will come into effect later this week.
This decision follows months of negotiations and threats of Chinese retaliation, with Beijing warning of potential consequences, including tariffs on European goods. China has already hinted at retaliatory measures, including possible actions against dairy, pork, and large-engine cars from Europe.
Chinese automakers, especially BYD Co., have rapidly grown in the global EV market, raising concerns among European carmakers such as Mercedes-Benz and BMW about potential damage to their sales in China. Volkswagen is already considering closing several factories in Germany due to the pressures in the market.
The EU's tariffs come amid a broader effort to counter Chinese industrial subsidies and maintain European competitiveness, but this has raised the risk of an escalating trade confrontation. While discussions between Beijing and Brussels continue, no breakthrough has been reached so far, and China has urged for a collective agreement for all automakers rather than individual deals.
China has also threatened to freeze investments in countries backing the tariffs and could raise its vehicle tariffs, which were reduced to 15% in 2018, to as high as 25%. Both sides are expected to face further challenges in negotiations, and China's retaliatory measures could begin to materialize next month.
Amid these tensions, both the EU and China are also keeping an eye on the upcoming US election, as a possible return of Donald Trump could bring further tariffs that would impact both economies.
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