The central bank of Belarus maintained its benchmark refinancing rate at 23.5 percent to ensure an "attractive rate of return" on ruble deposits that exceeds the yield on foreign currencies, helping the bank maintain stable foreign exchange markets and curb inflation.
The National Bank of the Republic of Belarus, a former Soviet Republic that borders Poland, has cut rates by 650 basis points this year, most recently in June, due to falling inflation. But Belarus' inflation rate was 15.5 percent in October, slightly up from 15.42 in September and 15.0 in August.
The central bank also said in a statement from Nov. 14 that the growth in ruble time deposits was not stable enough despite an increase during October.
In August the central bank said it would continue its "rigorous" monetary policy in the second half of the year in order to reach its inflation target, stabilize the currency market and the deposit market.
The bank's goal is to bring inflation down to 12 percent and below, with interest rates kept positive to insure a steady inflow of ruble deposits. The bank has asked commercial banks to offer attractive deposit terms and introduce new instruments to help attract deposits.
Another goal of the central bank is to raise the country's international reserves.
Belarus' currency, the ruble, has been depreciating steadily since April 2012, and is down 8 percent against the U.S. dollar this year, trading at 9.30 per USD today from 8.55 end-2012.
Belarus went through a balance of payments crises in May 2011 and the country devalued its ruble by about half, igniting inflation that exceeded 100 percent in late 2011 and early 2012. 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 by February 2012 the bank started cutting its refinancing rate in response to a steady decline in inflation from a high of 109.73 percent in January 2012.
Belarus' Gross Domestic Product contracted by an annual 0.5 percent in the second quarter compared with a 3.8 percent expansion in the first quarter.