Belarus: Central Bank keeps policy rate unchanged in March; abandons meeting schedule
March 12, 2021
At its 12 March meeting, the National Bank of the Republic of Belarus kept the refinancing rate unchanged at its record low of 7.75%. The move came after the Bank postponed a monetary policy decision on 12 February.
The decision not to raise rates was likely to protect an already fragile economy, despite soaring inflation. Moreover, the Bank likely also had one eye on supporting indebted state-owned companies. Instead, the Bank stated it had taken steps to control the monetary base with the objective of tackling inflation, while the government has recently stepped in with tighter price control measures in a bid to contain price pressures.
Looking ahead, the Bank did not provide explicit guidance on the future direction of rates. It did, however, state that it will aim to control money supply—the intermediate target is for broad money supply growth between 7–10% in annual terms by December this year—in a bid to achieve its main objective of inflation below 5%. In addition, the Bank canceled the current meeting calendar and all scheduled meetings, which could suggest a move away from the refinancing rate as a key tool for monetary policy. Although our panelists have not accounted for the latest developments, they are currently divided, with slightly more than half seeing a higher rate by end-2021.
Author: Frederico Teixeira de Abreu, Junior Economist