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Belarus Monetary Policy November 2020

Belarus: Central Bank keeps policy rate unchanged in November

At its 11 November meeting, the National Bank of the Republic of Belarus kept the refinancing rate unchanged at its record low of 7.75%, after easing its stance by a cumulative 125 basis points in several meetings earlier in the year.

An increase in inflation, spurred by a depreciating currency as agents look for foreign exchange amid heightened uncertainty, drove the need to halt further easing. However, the Bank underlined that the outflow of funds from the banking system eased over September–October, which has helped to steady the ruble somewhat. This dynamic, if maintained, could stabilize inflation ahead.

Looking forward, the Bank did not provide explicit guidance on the direction of rates. It did, however, state that current inflationary pressures are temporary and that inflation should approach the 5% target by end-2021, which could suggest possible room for easing ahead. That said, most of our panel have a different view and expect higher rates by the end of next year, likely to support the weakening currency.

The next monetary policy meeting is scheduled for 12 February 2021.

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