Central Bank of Tunisia Drops Rate 50bps to 3.50%

The Central Bank of Tunisia reduced its key interest rate by 50 basis points to 3.50% from 4.00% previously.  The Bank said: "To boost economic activity and the implementation of investment plans by limiting the financial burden on businesses, the Council decided to reduce, again, the rate of the BCT half a percentage point to bring it back to 3.5 percent,".  The Bank also noted a slowdown in activity in the non-manufacturing sectors, and a decrease in private investment and FDI flows; and noted the "persistence of economic difficulties" were connected with the recent regime change and associated period of instability.

The Bank previously also cut its interest rate by 50 basis points to 4.00% when it met in late June.  Tunisian officials have been quoted as expecting 1% annual GDP growth this year, compared to 3.7% in 2010, as the Tunisian economy recovers following a period of instability and social unrest where an uprising forced former leader Zine al-Abidine Ben Ali to leave the country, and acted as inspiration for further revolts around the MENA region.

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