Belarus raises rate 1st time in 6 years as inflation rises

      The central bank of Belarus raised its benchmark interest rate for the first time in more than 6 years to limit what is said was "pro-inflationary risks" and strengthen its control over money supply as it seeks to pull back rising inflationary expectations.
     The National Bank of the Republic of Belarus (NBRB) raised its refinancing rate by 75 basis points to 8.50 percent, its first rate hike since January 2015 that comes after the bank's board last month tightened its control over liquidity and the expansion of its monetary base to limit inflation.
     In addition to the refi rate, the central bank also raised the overnight loan rate to 9.5 percent and the overnight deposit rate to 7.50 percent.

     Today's rate hike punctuates a monetary easing cycle under way since April 2016, which comprised 19 cuts to the refi rate by a total of 17.25 percentage points, including three cuts last year by 1.25 percentage points.
     Belarus has a history of rampant inflation which hit an annual 110 percent in January 2012 when the central bank's refi rate was 45 percent. From that level, inflation declined and in February 2012 the central bank began lowering its refi rate and cut it more than in half by August 2014.
     After an uptick in inflation in 2015, NBRB reversed course and raised its rate but then returned to the easing path in April 2016 as inflation continued its steady decline.

      But since August 2020 inflation in Belarus has accelerated, pushed up by the one-two punch of a fall in the Belarus ruble in March following the global COVID-19 crises and then political unrest following a contested presidential election in August 2020.

     "At the end of 2020, inflationary processes accelerated, which was due to the transfer of the depreciation of the Belarusian ruble to prices, as well as supply shocks in the markets of certain food products," NBRB said.

     After tumbling 18 percent against the U.S. dollar in February through late March last year, the ruble bounced back, like most other currencies.
      But after widespread protests broke out following the re-election of Alexander Lukashenko, who has ruled the former Soviet republic since 1994, the ruble again fell and has remained weak since then as demand for fresh elections continue and neither the United States nor the European Union have recognized Lukashenko as the country's legitimate leader.
      Today the ruble was trading at 2.61 to the U.S. dollar, down 0.8 percent this year and while it is up 2.7 percent since a record low of 2.68 in early September 2020, it is still almost 20 percent below its level at the start of 2020.

     While today's rate hike was hardly unexpected following last month's initial move to limit inflation, the timing of the board's decision was a surprise as the bank last month also canceled scheduled board meetings in favor of taking decisions when necessary.

      Although inflation in Belarus eased to 8.5 percent in March from 8.7 percent in February, it remains well above the central bank's target of 5.0 percent and the bank said surveys show inflation expectations have risen against the backdrop of rising inflation and its prolonged deviation from its target.

      In addition to the rise in food prices worldwide and higher prices for imported non-food products, domestic prices are also under upward pressure from changes to taxes.

      Easy monetary policy worldwide is also expected to boost inflation worldwide and the central bank said inflation in its main trading partner of Russia is first expected to return to its target in the first half of 2022.

      "Taken together, these factors form the preconditions for maintaining high inflationary expectations of economic agents for a long time, which increases the risk of continued high inflation in the future," the central bank said.

      Although weak domestic demand should lower the rise in consumer prices starting in the second quarter of this year, NBRB first expects inflation to decline by the end of this year to around 7 percent in December and then continue to ease to close to its 5.0 percent target from the second quarter of 2022.

Belarus holds rate, tightens liquidity control to curb CPI

     The central bank of Belarus maintained its benchmark interest rate but suspended its facilities that allow it to permanently offer and withdraw liquidity to commercial banks in a move it said was aimed at strengthening its control over the growth of the monetary base and money supply to "limit inflation."

     Instead, the National Bank of the Republic of Belarus (NBRB) will support banks' need for liquidity by holding auctions for funds up to 7 days along with monthly auctions for 6-month funds.

      "The volume of liquidity provision to banks will be determined based on the need to achieve operational and interim goals, said the central bank which is using the monetary base and money supply as intermediate monetary policy benchmarks in 2021.

     The suspension of the permanent liquidity facilities will remain in effect until the bank's board decides to resume them, it added.

     NBRB kept its benchmark refinancing rate at 7.75 percent, unchanged since June when the rate was cut following a request by the country's president, Alexander Lukashenko, who has ruled the former Soviet republic since 1994.

     Since April 2016 NBRB has been in a monetary easing cycle and has cut the refi rate 19 times and by a total of 17.25 percentage points, including three times in 2020 by a total of 1.25 percentage points.

     The decision comes after the board's scheduled meeting on Feb. 17 was pushed back to today because it had to carry out further analysis of the "dynamics of consumer prices" and the duration of the factors that had led to an acceleration in inflation.

     The central bank also said today it has scrapped its schedule for board meetings this year, saying decisions on changing the refinancing rate and instruments for regulating banks' liquidity "will be considered as necessary."

     According to its previously published schedule, the next meeting on monetary policy was scheduled for May 14.

     Inflation in Belarus, which continues to suffer from a political crises following a contested presidential election in August last year, has accelerated in the last seven months and hit 8.7 percent in February, the highest since January 2017, and up from 7.7 percent in January and 7.4 percent in December.

     In November last year NBRB's chairman said the rise in inflation was temporary and by the end of 2020 inflation would be around 6 percent and then approach the bank's target of 5 percent by the end of 2021.

     In February the cost of fruits and vegetables was 15.9 percent higher than in the same month last year while regulated prices were up 8.5 percent.

     A steady fall in the exchange rate of the Belarusian ruble has also pushed up import prices.

     After an initial drop in March last year due to the outbreak of the COVID-19 pandemic, the ruble bounced back but then suffered a new bout of weakness in August last year as protests broke out over the presidential election and since then the ruble has continued to lose ground.

     Today the ruble was trading at 2.59 to the U.S. dollar, largely unchanged this year but down around 19 percent since the start of 2020.

      After Lukashenko said he won the presidential election with 80 percent of the vote, protesters have frequently gathered and more than 30,000 people have been detained by the police.

      The European Union has imposed sanctions on government officials for repression against peaceful demonstrators and electoral misconduct.

       This week the Eurovision Song Contest rejected Belarus' entry, saying it put the non-political nature of the competition into question and reactions to the entry risked bringing the reputation of the organization into disrepute.

      Belarus' entry to the popular song contest featured lyrics such as "I will teach you to toe the line" and sparked calls by a Swedish member of the European Parliament lawmaker for the country to be suspended from the competition.

     www.CentralBankNews.info

Belarus postpones policy decision to analyze inflation

      Belarus' central bank has delayed today's scheduled decision on monetary policy until March, with the board saying it needs to conduct further analysis on the "dynamics of consumer pries and assess the duration of the impact of the key factors that led to the acceleration of consumer price growth."
     The board of the National Bank of the Republic of Belarus (NBRB) said on its website it would now consider monetary policy on March 12.
     The central bank of Belarus has maintained its benchmark refinancing rate at 7.75 percent since June when it was cut following a request by the country's president, Alexander Lukashenko, who has ruled the former-Soviet republic since 1994.

      Last year the central bank cut its refi rate three times by a total of 125 basis points and since April 2016 the bank has cut the rate 19 times and by a total of 17.25 percentage points.

     Inflation in Belarus has been accelerating in the last six months and rose to 7.7 percent in January from 7.4 percent in December.

     At its last policy meeting in November 2020 NBRB attributed the rise in consumer prices, especially imported non-food items, to the depreciation of the Belarus ruble.

     The bank's chairman, Pavel Kallaur, said in a statement in November the rise in inflation was temporary and by the end of 2020 inflation would be around 6 percent and then approach the bank's target of 5.0 percent by the end of this year.

     The Belarus ruble suffered twin shocks in 2020, first in March as COVID-19 spread worldwide and then in August after Lukashenko said he won the presidential election with 80 percent of the vote.

     But opponents say they won the election and more than 30,000 people have been detained by police since then following mass protests. 

    Last year the European Union imposed sanctions on Belarusian officials, including travel bans and a freeze of assets, for repression against peaceful demonstrators and for misconduct of the electoral process.

     On Feb. 16 Reuters reported Belarusian security forces had searched the homes of journalists and human rights activists across the country

     The Belarus ruble has been largely stable this year and was trading at 2.596 to the U.S. dollar today, down 19 percent since the start of 2020.

     www.CentralBankNews.info

   

Belarus maintains rate as inflation rise seen temporary

      The central bank of Belarus, where peaceful protesters continue to be arrested during weekend demonstrations over the presidential election three months ago, left its benchmark interest rate steady, saying the rise in inflation is temporary and mainly due to a depreciation of the Belarusian ruble.
     The National Bank of the Republic of Belarus (NBRB) kept its refinancing rate at 7.75 percent, unchanged since June when it was lowered after a request by the country's president, Alexander Lukashenko, who has ruled the country since 1994.
     The central bank has cut its refi rate three times this year by a total of 125 basis points and 19 times since April 2016 by a total of 17.25 percentage points.
    Inflation in Belarus accelerated for the third month to 6.2 percent in October, with NBRB saying this was mainly due to a depreciation of the local ruble against foreign currencies in August, and mainly reflected in the prices of imported non-food items.
     "The weakening of the Belarusian ruble resulted from the increased demand for foreign currency in the domestic foreign exchange market," the bank's chairman, Pavel Kallaur, said in a statement, adding this was linked to increased negative expectations about the prospects for further economic growth along with an outflow of ruble and foreign currency savings from banks.

     Kallaur said the factors behind the rise in inflation would wane and by the end of the year inflation should be around 6 percent and then approach the bank's target of 5.0 percent by the end of 2021, helped by the prevalence of long-term disinflationary factors, including weak foreign demand.

     The Belarusian ruble has been hit hard twice this year, first in March as COVID-19 began to spread worldwide, and then in August following the Aug. 9 presidential election that Lukashenko said he won with 80 percent of the vote.

     But opponents of Lukashenko say they won the election and tens of thousands of Belarusians have continued to protest every weekend since then. On Sunday Nov. 8 observers say police detained more than a thousand peaceful protesters in the capital of Minsk.

     The European Union on Oct. 2 imposed sanctions - such as a travel ban and an asset freeze - on Belarusian officials seen as responsible for "repression and intimidation" against peaceful demonstrators, opposition members and journalists and for "misconduct" of the electoral process.

     On Nov. 6 the European Council added another 15 members to its list of sanctions, including President Lukashenko, his son and the national security adviser.

     The Belarusian ruble has firmed this month and was trading at 2.56 to the U.S. dollar today, down 18 percent this year.

     "Currently, the situation in the financial market is stabilizing," Kallaur said, adding the outflow of funds from the banking system slowed in September and October, helping stabilize the exchange rate.

     In January the central bank and government adopted a strategy to improve trust in the Belarusian ruble, which was only introduced in July 2016, and reduce the reliance on foreign currencies in domestic transactions. The strategy includes a full transitioning to inflation targeting by 2021.

     Belarus' gross domestic product shrank an annual 0.2 percent in the first quarter of this year, down from growth of 1.6 percent in the previous quarter.

    www.CentralBankNews.info

     

Belarus holds rate as inflation rises from falling ruble

      The central bank of the country of Belarus, which continues to see widespread protests over a contested presidential election on Aug. 9, left its benchmark interest rate steady, saying inflation is still expected to decline toward its target despite a recent acceleration due to a weakening of the exchange rate.

     The National Bank of the Republic of Belarus (NBRB) kept its refinancing rate at 7.75 percent, unchanged since June when it was cut following a request by the country's president, Alexander Lukashenko, who has ruled the country since 1994.

     NBRB has cut its refi rate three times this year by a total of 125 basis points and 19 times since April 2016 by a total of 17.25 percentage points.

     On Aug. 12, when the board last met, it decided to meet today, ahead of a previously scheduled meeting on Nov. 11, which also will be held.

     On Monday European Union (EU) foreign ministers agreed to sanction Lukashenko and other senior officials amid worsening police violence against protesters who say the August election, in which Lukashenko said he won with 80 percent of the vote, was rigged.

     Tens of thousands of Belarusians have demonstrated every weekend since August to demand new elections and on Sunday 713 people were detained by police, which now is allowed to use military-style weapons. 

     Exiled Belarusian opposition leader Sviatlana Tsikhanouskya, who protesters say won the election, has set a deadline of Oct. 25 for Lukashenko to leave office or face nationwide strikes that would paralyze the country.

     The EU cited a complete lack of will by Lukashenko to engage in any discussions over holding new elections leaves it will little choice other than to proceed with sanctions.

     Following the election, the Belarusian ruble has continued to weaken though it has recovered in the last month after hitting a record low of 2.68 to the U.S. dollar on Sept. 3. Today it was trading at 2.58 to the dollar, down 18.6 percent this year.

     In January the central bank and government adopted a strategy to improve trust in the Belarusian ruble, which was introduced in July 2016, and reduce reliance on foreign currencies in domestic transactions.

     More than 90 percent of government debt is denominated in foreign currency and the strategy includes full transitioning to inflation targeting by 2021.

     In September the central bank said its reserves had declined by 15.7 percent that month to US$7.5 billion and it paid down $351.7 million in external debt. Belarus has some $3.6 billion of U.S. dollar bonds outstanding and some $8 billion in loans from Russia.

    Inflation in Belarus rose to a higher-than-expected 6.1 percent in September from 5.6 percent in August, with NBRB saying this was due to higher prices for imported goods due to a weakening of the ruble in August against a background of higher demand for foreign currency.

     Inflation by the end of this year is estimated to be around 6 percent, with the weakening of the ruble pushing up inflation in the short term, the central bank said.

     In the medium term NBRB said prolonged disinflationary factors are expected to dominate and push inflation back to its targeted trajectory near 5 percent.

    In the first quarter of this year Belarus' gross domestic product shrank 0.20 percent year-on-year.

    www.CentralBankNews.info

     

Belarus holds rate as FX market prevents further easing

     The central bank of Belarus left its benchmark interest rate steady but said continued moderate easing of its policy stance was called for by lower-than-expected inflation but the current situation in the foreign exchange markets with heightened devaluation expectations did not allow for such a move today.

     "To maintain financial stability, it is important to maintain the propensity to save in local currency," Pavel Kallaur, chairman of the National Bank of the Republic of Belarus (NBRB) said in a statement, adding there was a risk of increased volatility in the global commodity and financial markets that could lead to higher price fluctuations for imported goods.

     In addition to leaving its refinancing rate at 7.75 percent, the bank's board decided to hold an additional monetary policy meeting on Oct. 14, ahead of the previously scheduled meeting on Nov. 11.

     NBRB last cut its key interest at an extraordinary board meeting on June 22 after the country's president, Alexander Lukashenko, asked the bank to look into lowering the rate.

     NBRB has cut its rate three times this year by a total of 125 basis points and 19 times since April 2016 by a total of 17.25 percentage points.

     Today's policy decision comes after Lukashenko, who has ruled Belarus since 1994, was re-elected on Sunday in a disputed election that triggered the largest protests in a decade. 

     Today, Reuters reported police had fired live rounds at protesters in the city of Brest and arrested more than 1,000 people nationwide, intensifying a crackdown that has prompted the European Union to weigh new sanctions on the country after lifting them in 2016.

     The Belarus ruble weakened this week and hit 2.48 to the U.S. dollar earlier today, down 1.6 percent since the start of August, but firmed following the central bank's decision to trade at 2.46, still down 14.6 percent since the start of the year.

     The people are accumulating their savings "in an unorganized form" and in foreign currency, with bank deposits down, Kallaur said, adding they are increasingly net buyers of foreign currency, indicating a surge in devaluation expectations.

     However, he considered this a temporary situation.

     Headline inflation in Belarus was steady at 5.2 percent in July and June, below the bank's forecast from May, and is forecast to be in a range of 5.0 to 5.3 percent until the end of the year.

     Economic activity declined in the second quarter due to lower external demand and trade, a deterioration in companies' financial conditions and domestic demand, Kallaur said.

     Belarus' gross domestic product contracted by 0.3 percent in the first quarter from the same quarter last year.

      In January the central bank and government adopted a major strategy to improve trust in the Belarusian ruble, which was introduced in July 2016, and reduce reliance of foreign currency in domestic transactions.

     Some 97 percent of the government's debt is denominated in foreign currency and the strategy includes a full transition to inflation targeting by 2021.

     www.CentralBankNews.info

     

       

     

This week in monetary policy: New Zealand, Rwanda, Belarus, Serbia, Uganda, Egypt, Mexico & Peru

    This week - August 9 through August 15 - central banks from 8 countries or jurisdictions are scheduled to decide on monetary policy: New Zealand, Rwanda, Belarus, Serbia, Uganda, Egypt, Mexico and Peru.

    Following table includes the name of the country, the date of the next policy decision, the current policy rate, the result of the last policy decision, the change in the policy rate year to date, and the rate one year ago.

    The table is updated when the latest decisions are announced and can always accessed by clicking on This Week.

WEEK 33
AUG 9 - AUG 15, 2020:
NEW ZEALAND	12-Aug	0.25%	0	-75	1.00%	DM
RWANDA	12-Aug	4.50%	-50	-50	5.00%
BELARUS	12-Aug	7.75%	-25	-125	9.50%
SERBIA	13-Aug	1.25%	0	-100	2.50%	FM
UGANDA	13-Aug	7.00%	-100	-200	10.00%
EGYPT	13-Aug	9.25%	0	-300	14.25%	EM
MEXICO	13-Aug	5.00%	-50	-225	8.00%	EM
PERU	13-Aug	0.25%	0	-200	2.50%	EM

 

    www.CentralBankNews.info

Belarus cuts rate 3rd time in '20 after Lukashenko request

     The central bank of Belarus cut its benchmark interest rate for the third time, saying domestic inflation was slowing faster than expected while inflation in trading partners was also slowing down more rapidly, leading other central banks to actively lower their interest rates.
     The National Bank of the Republic of Belarus (NBRB) cut its refinancing rate by another 25 basis points to 7.75 percent and has now cut it 125 points this year following cuts in February and May.
     Since April 2016 NBRB has been easing its monetary policy and cut the rate 19 times by a total of 17.25 percentage points.
      The rate cut was decided at an extraordinary meeting of NBB's board today, ahead of the scheduled meeting on Aug. 12, with the rate cut taking effect on July 1.
      In addition to cutting the refinancing rate, the overnight loan rate was also cut 25 basis points to 8.75 percent and the overnight deposit rate to 6.75 percent.
      The board meeting comes after Belarus President Alexander Lukashenko on Friday asked the central bank to look into lowering the refinancing rate at a meeting to discuss economic support measures, according to local press reports.
      According to BelTA, the state-owned national news agency, Lukashenko said all countries are lowering their interest rates to revive economic activity, inflation is within forecasts, and the central bank should carry out this rate cut before the end of June.
      Belarus, formerly known as White Russia or Belorussia, became independent of the Soviet Union in 1991 and Lukashenko has been president since 1994.
      Headline inflation in Belarus eased to 4.9 percent in May from 5.4 percent in April, just below NBRB's target of 5.0 percent, while core inflation slowed to 3.9 percent from 4.5 percent in April.
     Under these conditions, the central bank said continued easing its monetary policy, with moderately soft monetary conditions would allow it to maintain an acceptable level of price and financial stability.
      After depreciating sharply in February and March, the Belarus ruble has risen since April though it remains well below its level at the start of the year.
     In January Belarus' government and the central bank adopted a major strategy to improve trust in the Belarusian ruble by pushing a coordinated policy to reduce reliance of foreign currency in the country and ensure the domestic currency had a leading role in transactions.
     The government's debt is around 97 percent denominated in foreign currency. A new Belarusian ruble was introduced in July 2016.
     This strategy includes full transition to inflation targeting by 2021, a reduced footprint by NBRB in the foreign exchange market, reduced monopolies in the economy, lower state debt, regular issues of debt in Belarusian rubles, and ensuring that all taxes, rents, tariffs and prices by state-run organizations are set in Belarusian rubles.
      The Belarusian ruble was trading at 2.37 to the U.S. dollar today, up 10.5 percent from a record low of 2.62 on March 24 and down 11.4 percent this year.

     www.CentralBankNews.info
   

Belarus cuts rate another 25 bps to keep neutral stance

     The central bank of Belarus continued its 4-year easing cycle and lowered its key rate further to maintain a neutral monetary policy stance and keep inflation near its 5.0 percent target in 2020.
      The National Bank of the Republic of Belarus cut its benchmark refinancing rate by another 25 basis points to 8.75 percent, its first cut this year.
     Since April 2016, when it embarked on the current easing cycle, the rate has now been cut by 16.25 percentage points from 25.0 percent.
     Future policy decisions will continue to rest on achieving the inflation target, the bank added.
     The central bank said its vision of inflation in 2020 had not changed since November and it still expects inflation to fall within its 5.0 percent target, taking into account the planned rise in regulated prices and tariffs, low inflation in Russia and Europe, and a largely neutral impact on prices from domestic economic activity.
      The decision to lower the rate takes into account any risks and uncertainties that could create inflationary pressures, the central bank said, pointing to the volatility of international financial markets and events in China, a reference to the current outbreak of the coronavirus that is adding uncertainty to the global economic outlook.
      Headline inflation in Belarus was steady at 4.7 percent in January and December, slightly lower than the central bank had expected, but close to its target.
     The Belarus ruble is also expected to be near equilibrium, the central bank said.
     The government and central bank in January adopted a major strategy to improve trust in the Belarusian ruble by pursuing a coordinated policy to reduce the reliance of foreign currency in the country and ensure the Belarusian ruble occupies a leading role in the domestic economy.
     Government debt commitments are around 97 percent denominated in foreign currency.
     Among the features of this strategy is for the central bank to fully transition to inflation targeting by 2021, a reduced footprint by the central bank in the foreign exchange market, reduced monopolies in the economy over the next few years, a reduction in state debt, regular issues of government debt in Belarusian rubles starting this year with various periods of maturity, the creation of alternative forms of savings to procure long-term sources of funding in the ruble, and ensure that all taxes, rents, tariffs and prices by state-run organizations are set in Belarusian rubles.
     After rising from February 2019 to July 2019, the Belarusian ruble has eased since November and fell further to 2.19 to the U.S. dollar today, down 4.1 percent this year.

    www.CentralBankNews.info

   

Belarus cuts rate 2nd time, inflation slows toward target

     The central bank of Belarus cut its benchmark refinancing rate for the second time this year, saying this would help ensure a neutral monetary policy as inflation continues to slow.
    The National Bank of the Republic of Belarus cut its refinancing rate by another 50 basis points to 9.0 percent and has now cut it by 100 points this year, extending an easing cycle since April 2016. Since then the repo rate has been lowered by 16 percentage points.
    The bank also narrowed its interest rate corridor to 2 percentage points from 2.5 points to increase the efficiency of the transmission of monetary policy on inflation.
     The overnight loan rate was cut 75 basis points to 10.0 percent and the overnight deposit rate by 25 basis points to 8.0 percent to help narrow the range of rates on instruments that regulate bank liquidity.
     "Subsequently, these rates will change simultaneously with the refinancing rate by an appropriate amount," the central bank said.
     Inflation in Belarus slowed to 5.3 percent in September and the central bank said it expects inflation to be near its 5.0 percent target by the end of 2019 and during 2020.
     Last month the central bank's deputy chairman, Sergei Kalechits, said the main objective next year is to keep inflation below 5 percent, to maintain the level of foreign exchange and gold reserves, develop financial market instruments and strengthen the banking system.
     Belarus' gross domestic product slowed slightly to 1.3 percent year-on-year in the first quarter of this year from 1.4 percent in the previous quarter.

    www.CentralBankNews.info

Belarus cuts rate 50 bps as inflation slowdown intensifies

     Belarus' central bank lowered its benchmark refinancing rate by 50 basis points to 9.50 percent to ensure interest rates remain neutral and inflation meets the target this year in light of a more intense slowdown of inflation in the second quarter of this year.
     It is the first rate cut by the National Bank of the Republic of Belarus since June 2018 but extends the easing cycle that was begun in April 2016. Since then the bank's repo rate has been lowered by a total of 15.50 percentage points.
     In addition to the cut to the refinancing rate, the central bank's board said the rate on overnight credit would be cut by 75 basis points to 10.75 percent while the rate on overnight deposits would be cut by 25 basis points to 8.25 percent.
     All the central bank's new and lower interest rates will take effect from Aug. 14.
     Inflation in Belarus slowed to 5.7 percent in June from 6.2 percent in May and the central bank said its assessment of consumer price growth, which excludes seasonal changes, shows a decline in inflation to below its target of 5.0 percent.
     In the previous three quarters, inflation was higher than this indicator, the bank added.
     "Further decisions in the field of the National Bank's key interest rates will depend on the correlation between the inflationary and deflationary factors," the central bank said.

Belarus maintains rate and neutral policy stance

     Belarus' central bank kept its benchmark refinancing rate steady at 10.0 percent and maintained its neutral policy stance by saying future decisions about the interest rate will depend on the direction of how the balance shifts between inflationary and deflationary factors.
     The National Bank of the Republic of Belarus, which has maintained its rate since cutting it by 50 basis points in June 2018 as part of an easing cycle begun in April 2016, added that preserving its inflation target for 2019 without changing the monetary conditions contributed to keeping the refinancing rate steady at a time of uncertain external conditions.
     In December the central bank estimated inflation at the end of 2018 would not exceed 5.50 percent and reach maximum of 6.0 percent.
     In fact, inflation rose to 5.6 percent in December from 5.0 percent the previous month and the central bank expects a temporary acceleration in inflation at the beginning of 2019 due to higher prices of imported goods and services.
     But as the factors fade, consumer prices are expected to slow and be close to the bank's target of 5.0 percent by the end of 2019-2020.
     The economy of Belarus slowed last year with the annual growth in gross domestic product at 2.3 percent in the third quarter, down from 3.9 percent in the second and 5.2 percent in the first quarter.
     Earlier this month the International Monetary Fund (IMF) said prudent monetary policy and growing credibility of the central bank was helping keep inflation at historically low levels, along with a relatively stable exchange rate, despite rapid wage growth.
     The IMF also supported the current monetary policy stance and welcomed further progress towards inflation targeting and commended authorities for the liberalization of the foreign exchange market.
     The IMF forecast economic growth in 2019 of 2.4 percent, down from 3.7 percent in 2018, and 2.3 percent growth in 2020.
     Inflation was seen averaging 5.0 percent this year, down from 5.4 percent in 2018, and 5.0 percent in 2020.

     www.CentralBankNews.info

Belarus leaves rate steady so inflation hits 2019 target

      The central bank of Belarus left its benchmark refinancing rate at 10.0 percent to ensure that inflation will meet its 2019-2020 target of 5.0 percent.
      The National Bank of the Republic of Belarus, which last lowered its rate by 50 basis points in June as it continued the easing cycle begun in April 2016, said inflation was currently is in line with forecasts and was expected to be about 5.5 percent by the end of 2018.
      The central bank added domestic demand is having a moderate impact on prices while there is some upward pressure from the external sector in connection with an expected acceleration of inflation in Russia.
      To curb this external pressure on prices, the central bank said it would maintain disinflationary monetary conditions.
      Since April 2016 the central bank has cut its refinancing rate by a total of 15 percentage points from 25.0 percent as inflation eased to average 4.6 percent last year, down from 10.6 percent in 2016.
      The inflation target has also been gradually lowered from 9.0 percent in 2017 to maximum 6.0 percent this year and then 5.0 percent for 2019 and 2020.
      In August inflation rose to 5.0 percent, up from 4.1 percent in the previous two months, while the economy grew by an annual 3.9 percent in the second quarter, down from 5.2 percent in the first quarter.

      www.CentralBankNews.info

     

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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Belarus cuts rate by 100 bps for sixth month in a row

    The central bank of Belarus cut its benchmark refinancing rate by 100 basis points for the sixth month in a row and said the possibility of further rate cuts would be determined by the continued easing of the risks to inflation.

     The National Bank of the Republic of Belarus cut its refi rate to 12.0 percent from 13.0 percent and has now cut it by 600 basis this year. Since March 2016, when the central bank began lowering rates from 25 percent, the rate has be cut by 1,300 points.

      The central bank said inflation expectations had continued to ease and this would have a favorable effect on the rise in prices in coming months. 

     It added the average annual growth of broad money was around 5 percent in June and the continued net supply of foreign currency to the domestic market had a positive impact on International reserves and ensured a stable exchange rate of the Belarus ruble.

     Inflation in Belarus was estimated by the central bank at 6.2 percent, slightly up from 6.1 percent in May but down from 6.3 percent in April. Core inflation confirmed the growing stability of decelerating inflation and was estimated at 5.3 percent in June.

     Last month the central bank said it expected inflation to remain slightly above 6 percent in coming months.

     The Belarus ruble fell steadily, and at times very rapidly, from early 2011 until it hit a record low of just over 22,00 to the U.S. dollar in February 2016. Since then it has been appreciating and was trading at 19,319 to the dollar today, up 1.74 percent since the beginning of 2017.

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Belarus cuts rate 100 bps, further cuts rest on inflation

    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.

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Belarus cuts rate 100 bps to ease cost of domestic credit

    The central bank of Belarus cut its benchmark refinancing rate by 100 basis points to 24.0 percent and the reserve requirement by 50 points to 7.50 percent in a move to reduce the cost of credit, something the central bank aims to continue in the first half of this year.
    The National Bank of the Republic of Belarus, which raised its rate by 500 basis points in 2015 to curb inflation that was boosted by the devaluation of the Belarus ruble, still expects inflation to be below its target of 12 percent in 2016, something the bank aims to achieve by controlling money supply.
   Inflation in Belarus rose to 12.8 percent in February from 11.4 percent in January, primarily due to higher tariffs for housing and communal services, something the central bank said would not affect the recent trend in inflation.
    The rate cut will take effect April 1.
    The economy of Belarus, which borders Russia to the east, Ukraine to the south and Poland to the west, has been heavily affected by the economic crises in Russia, its main trading partner.
    Last year the central bank had to intervene in foreign exchange markets and multiple exchange rates emerged after the central bank imposed capital controls. In January 2015 the central bank then set an exchange rate of 13,760 to the U.S. dollar, a depreciation of 31 percent since the start of 2014, and since then the ruble has continued to ease and hit 22,050 to the dollar on Feb. 11.
    Since then, however, the ruble has firmed and was trading at 20,751 to the dollar today, still down 10 percent since the start of the year. The central bank has adopted an exchange rate policy known as a "managed float" with intervention only to avoid volatile changes.
    The average rate on new ruble credit in February was 33.1 percent in nominal terms or about 20 percent in real terms, the bank said.

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