The central bank of Belarus cut its benchmark refinancing rate by a further 150 basis points to 23.5 percent due to a continued fall in the inflation rate and inflationary expectations.
The National Bank of the Republic of Belarus has now cut rates by 650 basis points this year after cutting rates by 1500 points in 2012 in response to lower inflation.
"The decision was taken with regard to the current tendency for further deceleration of inflation and a decline in inflation expectations," the central bank said, adding the situation on the domestic foreign exchange market remains favorable for a stable exchange rate for the Belarusian ruble.
Real interest rates remain high, contributing to the inflow of households' deposits to banks and any "further change in the refinancing rate will depend on the macroeconomic situation in the country, as well as the dynamics of prices and inflation expectations," the bank said in a statement from June 7. The new rate takes effect June 10.
Belarus' inflation rate fell to 20.7 percent in April from 22.2 percent in March as it continues to trend downward from a high of almost 110 percent in January 2012. The country, a former Soviet republic, devalued its ruble by about half during a balance of payments crises in May 2011, sparking inflation.
The central bank responded by raising interest rates from 10.5 percent in January 2011 to a high of 45 percent in December 2011. But in February last year the central bank started cutting rates.
This year the central bank expects its refinancing rate to fall to 13-15 percent by the end of the year due to falling inflation.