Keep your eye on the ruble. Since the default of 1998, when the ruble collapsed and the savings of millions of ordinary Russians became worthless in a matter of days, the Central Bank of Russia has been pursuing a monetary policy known as “exchange rate targeting” – using the levers at its disposal to keep the national currency as stable as possible in relation to a given foreign benchmark currency or a basket of currencies. I’ve got to say that the CBR has done an admirable job pursuing this objective – the ruble has indeed been remarkably stable with respect to the US dollar and the euro for the better part of a decade, right on up until the dollar’s recent downward slide against all currencies, something that can’t be blamed on the Russians. However, this exchange rate targeting has come at the cost of high inflation for Russians, in part due to the continuing fall of the dollar, but also because of the less-than-intelligent fiscal policy the Russian power has been pursuing in recent years. On 17 June, Finance Minister Alexei Kudrin declared that over the next few years, the CBR is going to switch to a different kind of monetary policy – “inflation indexing”, where the objective is to keep domestic prices stable, even at the expense of the exchange rate. It is a maxim of macroeconomics that a central bank can only pursue one objective – you can’t keep both prices and the exchange rate steady simultaneously in the face of economic pressures, so you need to make a policy choice and stick with it.