Wednesday, January 31, 2018

Belarus cuts rate another 50 bps, inflation seen in target

     The central bank of Belarus lowered its benchmark refinancing rate by another 50 basis points to 10.50 percent citing its forecast that inflation will be within its target range this year and the continuing economic recovery.
       The National Bank of the Republic of Belarus has now cut its refi rate by 14.50 percentage points since March 2016 when it began an easing cycle by lowering rates from 25.0 percent.
       The new refinancing rate will take effect on Feb. 14.
       The central bank struck a neutral tone in its guidance today, saying future rate decisions would depend on the expected trajectory of inflation, the economy, and the likelihood and magnitude of risks that would prevent inflation from meeting the bank's target.
       Inflation in the former Soviet republic of Belarus eased to an average of 4.6 percent in 2017 from 10.6 percent in 2016 and is estimated to be around 5.0 percent in coming months and then be within the target in 2018.
       The economic recovery and the increase in consumption due to higher income still don't exert pressure on inflation, the bank said, adding low inflation in Belarus' main trading partners is also holding back price increases, describing the risk as inflation from external factors as low.
        In a separate statement, the central bank's board discussed its monetary policy guidelines for 2018 and set an inflation target of no more than 6.0 percent, down from 9.0 percent in 2017, due to continued high inflation expectations and the recovery of domestic demand.
        However, the central bank also reiterated its goal of lowering inflation to 5.0 percent by the end of 2020.



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