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Defense firms are busy — but high inflation and interest rates past 20% have left them struggling. AdvertisementIn Russia's defense sector, demand is surging — but its companies are struggling all the same. Rising interest rates and export bans were eroding Russian defense companies' profits across the board, they said, making the Russian state the only guarantor of revenues. Sheremeta described the situation as a "death spiral," where war spending begets more inflation, which requires more war spending. "If some defense companies cannot fulfill their obligations, the Kremlin can simply nationalize them," Sheremeta said.
Persons: , Sergei Chemezov, Roman Sheremeta, Sheremeta, Daniel Treisman, Korhonen, Julian Cooper, Konstantin Sonin, Sonin Organizations: Service, Rostec, Weatherhead School of Management, Case Western Reserve University, Bloomberg, University of California, National Bureau of Economic Research, Central Bank, Bank of Finland Institute, Emerging, Centre for Russian, East European Studies, University of Birmingham, University of Chicago Harris School of Public, Project Syndicate Locations: Russia, Ukraine, Russian, Los Angeles
New York CNN —For the second time this year, the Federal Reserve is gearing up to raise interest rates right after a bank failure. When the Fed raises interest rates, banks need to raise the rates on their savings accounts in order to lure in depositors from their competitors. Why, then, is the Fed likely to raise interest rates on Wednesday? Fed wants to avoid ‘stop-and-go’ rate hikesThe Fed is raising interest rates to lower inflation. In the 1970s and early 1980s, the Fed flip-flopped between raising interest rates to get inflation under control and lowering rates to spur economic activity.
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