The refinancing rate of the National Bank of the Republic of Belarus (NBRB) will be reduced by two percentage points to 18% per annum as from 17 August, BelTA learned from representatives of the Information and Public Relations Office of the country's central bank.
In particular, as from 17 August the refinancing rate will be reduced from 20% to 18% per annum. The interest rate on standing and bilateral operations designed to keep up the current liquidity of Belarusian banks will be reduced from 25% to 23% per annum.
The relevant decisions were made by the NBRB Board and the Monetary Policy Committee on 3 August after reviewing the dynamics of inflation processes, the state of the balance of payments and the current account, the situation on the currency market and the financial market of the country.
In June 2016 inflation slowed down to 12.1% year on year. In Q2 2016 the monthly increase in consumer prices averaged 0.5% (0.8% in the same period of last year). Trend inflation demonstrated a similar tendency. In June 2016 aggregated trend inflation dropped to 10.3% in comparison with June 2015.
The dynamics of monetary aggregates enables conditions conducive to further inflation decline. In June 2016 the year-on-year increase in broad money supply totaled 14.1%.
The NBRB attributed the increase in the deficit of the current transactions of the balance of payments in H1 2016 primarily to worsening terms of trade in energy commodities and the falling demand for potash fertilizers. Meanwhile, economic correction measures have been beneficial for foreign economic operations, which do not depend on short-term market factors.
The source stated that foreign currency sales have been exceeding foreign currency purchases on the domestic currency market since February 2016, including the corporate sector.
The structure of the deposit market is improving primarily thanks to customers switching to irrevocable deposits with longer deposit periods.
The lower interest rates will improve the ability of non-financial organizations to honor their credit commitments to banks, thus reducing financial stability risks, explained the National Bank of the Republic of Belarus.
Consequent decisions concerning interest rates will be made depending on how close the actual inflation dynamics is to the forecast trajectory. The state of the balance of payments and its individual components will also be a factor.
Written by belta.by
