The National Bank of Belarus (NBB) is going to cut on August 14 its refinancing rate from the current level of 10% per annum to 9.5% per annum, the central bank said in a statement on August 7.
The rate on overnight credit will be cut from 11.5% per annum to 10.75% per annum, while the rate on overnight deposit from 8.5% per annum to 8.25% per annum.
In June, the NBB's key refinancing rate was cut from 10.5% to 10%. The central bank attributed the move to the fact that "projections concerning the situation in economy, foreign trade, the currency market, and the deposit market indicate that the emerging money and credit conditions will keep inflation within the targeted range".
"The assessment of consumer price growth, excluding seasonality for April-June, shows its decrease below the target level being 5% (during the previous three quarters, the growth was higher than this indicator)," the NBB said in the statement. "The decisions taken in the field of interest rate policy ensure that it remains neutral in the context of the forecasted deceleration in inflation processes and the achievement of the inflation target for 2019."
The reduction in overnight credit and overnight deposit rates will narrow the interest rate collar on instruments designed to regulate banks’ liquidity and will increase the efficiency of the monetary policy transmission mechanism, the regulator added.
"Further decisions in the field of the NBB's key interest rates will depend on the correlation between inflationary and deflationary factors," the central bank underlined, adding that the next meeting on monetary policy of the NBB is planned for November 6.