Belarus Monetary Policy September 2018


Belarus: Central Bank keeps key rate at an over 10-year low in September

September 19, 2018

At its 19 September meeting, the Board of the National Bank of the Republic of Belarus (NBRB) kept the refinance rate unchanged at an over one-decade low of 10.0%. The Bank’s decision to hold the rate followed a cut in mid-June as was predicted by our Consensus.

Inflation dynamics were in line with the Bank’s forecasts, prompting its decision to refrain from further policy easing. After remaining at an all-time low of 4.1% in July, intensifying price pressures drove inflation up to 5.0% in August—although still within the Bank’s 6.0% cap—chiefly on the back of higher administered prices, including tariffs for communication services and retail prices for fuel. Meanwhile, in the face of an ongoing emerging-market selloff, the Belarusian ruble has largely held up against most major currencies. The NBRB also reaffirmed its inflation year-end inflation target of 5.5% plus or minus 0.5 percentage points.

In its communiqué, the NBRB signaled it expects rising domestic demand to only have a modest impact on inflation. However, the external sector’s backdrop poses significant upside risks to the Bank’s inflation outlook. These include an expected pick-up in inflationary pressures in Russia, due to capital outflows and a weakening currency; uncertainty over the impact of escalating global trade conflicts; and significant fluctuations in financial markets.

Inflationary pressures are expected to intensify slightly by the end of the year, and a rate cut therefore seems unlikely in the coming meeting. In the medium- to long-term, the NBRB remains confident that headline inflation will stabilize around its 5.0% target.

The next monetary policy meeting is scheduled for 19 December.

FocusEconomics panelists see the key interest rate ending 2018 at 10.0%. In 2019, panelists see the Central Bank lowering the monetary policy rate further to 8.5% by the end of the year.

Author:, Research Team Manager

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Belarus Monetary Policy Chart

Belarus Monetary Policy September 2018

Note: Refinance rate in %.
Source: National Bank of the Republic of Belarus (NBRB).

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