Russia will sacrifice its civilian economy on the altar of the war effort

WASHINGTON—Could the Central Bank of Russia finally be running out of options? The Central Bank of Russia remains the most competent player in the system governing Russia’s wartime economy. Preferential war lending blunts monetary policyHeadline inflation alone probably understates the pressure the Central Bank of Russia is under. Between mid-2023 and October 2024, Russia’s central bank raised rates from 7.5 to 21 percent, but the increase did not pass through evenly across sectors. While around $300 billion in Russian central bank reserves are immobilized in the West, the central bank has roughly another $300 billion in reserves that are in Russia or in jurisdictions that are not sanctioning Russia.