Gabriel Stein, chief of research at Lombard Street Research, talks with the Financial Times about why Russia’s economic stimulus policy package has failed to produce results.

Mr Stein says Russia is paying the price for its double exposure to
the “most serious hazards of the modern world – energy and exports to
continental Europe.” The former, he says, is the result of Moscow’s
single-minded pursuit of energy control, regardless of the damage to
Russia’s business climate.

“The rouble has strengthened this
year, partly on . . . optimism about emerging markets, partly due to -
but also a cause of – Russian stock market gains and partly [on] high interest rates.

“Rates
were cut to 12 per cent last week, [but] remain attractive – and should
provide a barrier to the rouble collapse that the state of the economy
seems to call for.

“If maintaining the value of the rouble
remains the goal, it will be very difficult to ease monetary policy
further. Better to act now to moderate a devaluation which represents
the loss of income implied by the collapse of energy prices.”

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