Thursday, April 7, 2016
When this happens buy the ruble
Russia's central bank chief, Elvira Nabiullina, is thinking about cutting rates. When she jacked rates up to 17%, like, overnight a little over a year ago she actually did much of the work of pushing inflation way up, which was a problem she was supposedly trying to fix. However, she doesn't understand that. The ruble plunged. Another thing she was trying to avoid.
Finally, she is now considering lowering rates. When that happens by the ruble. (There are futures contracts on the CME.)
Rate cuts are price cuts: they lead to lower, not higher inflation. Currencies rally. (Eventually, after the clueless first sell. Take their money please.)
Rate hikes on the other hand are price hikes, that's why the dollar is falling and you saw gold take off out of its four year bear market the mintue the Fed hiked rates back in December. The gold rally literally started on the day the Fed did that.