The amount of cash in circulation and funds in bank accounts in rubles in Russia is steadily increasing. Attempts by the Central Bank of Russia to influence this process by keeping the key interest rate at 21% have not yielded positive results. Given the current rate of money supply growth, it is extremely unlikely that the Russian regulator will reach the target inflation rate of 4% by 2026.
In February, the M2 money supply (a financial indicator that includes cash in circulation and funds in bank accounts of all client categories in the national currency) rose to $1.32 trillion. The annual growth rate of the money supply was 18.7%.
The main factors influencing the increase in M2 in February were high deposit interest rates (24%), a faster inflation rate (from 9.92% to 10.15%), a rise in consumer lending (over $6 billion, adding 26.1% compared to January), and a reduction in the national wealth fund (down to $133 billion, with a $1 billion decrease from January).
As a result, it is becoming increasingly difficult for Russian authorities to hide from the population the fact that the war against Ukraine is the primary source of negative financial processes in the country.
