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Belarus Monetary Policy November 2019

Belarus: Central Bank slashes refinancing rate to record low in November meeting

At its 6 November meeting, the National Bank of the Republic of Belarus (NBRB) cut the refinancing rate by 50 basis point to a record low of 9.00%. The rate on overnight credit was also slashed from 10.75% to 10.00%, as was the rate on the overnight deposit, from 8.25% to 8.00%.

Easing price pressures throughout the third quarter prompted the NBRB to cut the refinancing rate again in a bid to boost lackluster activity. Inflation fell to a 10-month low of 5.3% in September, where it remained in October, with slowing food prices and a stronger Belarusian ruble curbing price pressures. Meanwhile, lowering the overnight credit and overnight deposit rates should boost the efficiency of the monetary policy transmission mechanism by enabling the NBRB to regulate the availability of liquidity to the banking sector.

Looking ahead, the NBRB reaffirmed its projection that inflation will near the 5.0% target by the end of the year amid weak domestic demand. The external sector is also seen dragging on growth, with the economy losing considerable traction from last year. While the statement was devoid of forward guidance, the Bank is set to maintain an accommodative stance.

The next monetary policy meeting is scheduled for 12 February 2020.

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