Part 6/9:
Domestically, the Russian government is also confronting inflationary pressures. By keeping the public funding figures lower, it could help mitigate inflation fears among the populace. However, increasing interest rates to combat inflation poses its own challenges—less investment leads to fewer consumer goods over time, further complicating the economic picture.
Yet, even if risky loans threaten the banks, the Kremlin still benefits if these banks absorb the losses without direct intervention, allowing the government to transfer part of the war's financial burden away from its balance sheet.