It did not do much for the Ruble that the CBR hiked its key rate from 8.5% to 12%. The Ruble’s problems are not down to domestic interest rates. The old level was no doubt sufficient to fight inflation too. At just under 4½% inflation, interest rate levels were sufficiently high before Tuesday’s decision. However, factors like that are irrelevant to RUB exchange rates.

The Kremlin might be of the view that the effects of Russia’s economic isolation could be overcome with high interest rate levels. Of course, that’s a pie in the sky. As the effects are unavoidable, they will not simply disappear. They are likely to lead to further wild insults of the CBR from the Kremlin’s ‘economists’. And it will then have to take action again. It, therefore, seems likely that CBR policy will increasingly deviate from its former path of reason.