The central bank of Belarus cut its reference rate by another 100 basis points to 17.0 percent and said further cuts would depend on a steady decline in inflation, forecasts of inflation and the country's balance of payments.
The National Bank of the Republic of Belarus, which has now cut its rate by 800 basis points since March 2016, added today's rate cut was part of a strategy of reducing the level of dollarization in the economy by increasing the attractiveness of deposits in Belarussian rubles compared with other currencies, limiting banks' credit risks.
Inflation in the Belarus Republic, which borders Russia to the east, Ukraine to the south and Poland to the west, rose to 11.4 percent in November but the central bank said inflation in 2016 will average 11 percent, below the forecast of 12 percent.
The growth of money supply will remain moderate, with broad money up by 4.4 percent in November, down from 39.2 percent in November 2015, and the central bank expects current monetary conditions to result in a further slowdown inflation and it will reach single digits by the first quarter of 2017.
The current account of Belarus improved to a surplus of 1.7 percent of Gross Domestic Product in 2016 from a deficit 0.3 percent in 2015 while the trade balance improved to 4.4 percent of GDP from 1.6 percent, the bank said.
It added that the supply of foreign currencies continued in the fourth quarter of 2016, with the exchange rate of the ruble having an "insignificant" impact on the intensity of inflation.