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 US Congress has two days left to prevent a partial government shutdown, as President-elect Donald Trump rejected a bipartisan federal spending deal, calling for a focus on the debt ceiling before he assumes office next month.
Key Highlights
Trump Rejects Stopgap Bill
- Trump urged Republicans to oppose the stopgap spending bill, warning that any GOP members supporting it should face primary challenges in 2026.
- This rejection forced House Speaker Mike Johnson and Republican leadership to rework the proposal to gain support from both their narrow majority and Senate Democrats.
Implications of a Shutdown
- Without a deal by Friday midnight, a partial government shutdown will begin Saturday, disrupting services like air travel and law enforcement just before the Christmas holiday.
- If it occurs, it would be the first shutdown since late 2018–2019, during Trump’s first presidential term.
Debt Ceiling and Spending Debate
- Trump called for immediate action to raise the debt ceiling, a politically divisive move, alongside extending government funding.
- The federal debt has risen to US$36 trillion, fueled by Democratic-backed spending and Republican tax cuts, making the debt ceiling a recurring source of political tension.
- Elon Musk, Trump's ally and budget adviser, has backed calls to reject the spending bill, adding pressure on Congress.
Bipartisan Deal Provisions
The bipartisan bill includes:
- US$100 billion for disaster relief
- US$10 billion in farm aid
- Pay raises for lawmakers
- A crackdown on hidden hotel fees
However, Trump and Musk are pushing to strip provisions backed by Democrats.
Tensions Among Republicans
- Some hardline Republicans, like Marjorie Taylor Greene, have threatened House Speaker Johnson's leadership if he compromises, advocating a firm stance against the deal.
- Johnson has struggled to unify his party, often relying on Democratic votes to pass critical legislation.
Next Steps Unclear
- Bipartisan support is necessary to pass any bill through both chambers.
- Congress has failed to pass regular spending legislation for the fiscal year beginning October 1, making this stopgap measure essential to avoid a shutdown.
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