Russian invasion starts to trigger economic reactions

<p>Kia ora,</p><p>Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news the economic implications of sanctions after the Russian invasion of Ukraine are starting.</p><p>But first, remember today the RBNZ will review the OCR which currently sits at 0.75%. There will almost certainly be another increase, but will it be +0.25%? (the most likely), or +0.50% (to deal seriously with the 6%+ inflation currently hitting the economy?) There is a lot riding on this decision. All eyes will be on RBNZ at 2pm today (NZT).</p><p>In Russia "<a href="https://en.wikipedia.org/wiki/Defender_of_the_Fatherland_Day" target="_blank"><strong>Defense of the Fatherland Day</strong></a>", commemorating the first mass draft into the Red Army in 1918. In Ukraine, it is "<a href="https://en.wikipedia.org/wiki/Defenders_of_Ukraine_Day" target="_blank"><strong>Defenders of Ukraine Day</strong></a>". Testosterone levels are high in Eastern Europe at present.</p><p>Russia's invasion of some renegade Ukraine provinces has triggered sanctions, which are likely to upend some key economic activity in Europe and have global implications for energy prices. The situation is likely to get worse as Russia is promoting some far-fetched historical land claims (actually not too dissimilar to China's "nine dashed line" claims). It now claims the whole Donbas region, most of which separatists don't control. Fortunately for Russia, they hold the presidency of the <a href="https://news.un.org/en/story/2022/02/1112412" target="_blank"><strong>UN Security Council</strong></a>, so easily able to bat away any formal condemnation.</p><p>In the US, the <a href="https://www.markiteconomics.com/Public/Home/PressRelease/74fab5cff0d4400fb5776c46db6db6c0" target="_blank"><strong>February PMIs</strong></a> are expanding faster as their economy continues its good recovery despite inflation pressures.