Putin’s Inflation Gambit Threatens Russia’s War-Economy
The Ukraine war has pushed Russia toward an inflation-targeted, high-spending war economy. President Putin and policy elites insist on keeping a 4% inflation target, backed by the central bank, even as sanctions, oil-price caps, and heavy defense spending strain growth. Critics warn that record-high interest rates are hurting the defense-industrial complex and that Rostec’s plants could become unsustainable, risking long-term weapon supply and potential GDP stagnation or hyperinflation. While the approach may prevent immediate instability, it could erode Russia’s ability to sustain military production and economic health over time.
