The National Bank of Belarus lowered the refinancing rate again — from 36% to 34% per annum. This solution is fixed by the Board of the National Bank, approved on May 10, 2012. This will be the fourth refinancing rate reduction this year. The rate has dropped by 11% YTD.
Reduction of the refinancing rate is argued in the National Bank by the positive trends in the economy of Belarus — primarily, a slowdown in inflation (6.8%YTD).
Simultaneously with the decrease in the refinancing rate, interest rates on constantly available operations to support liquidity (overnight loans and swaps) and bilateral operations (lombard credit, swap transactions) are also going down from May 16 — from 60% to 55% per annum, while the rates on permanent affordable operations to withdraw liquidity (overnight deposits) — from 23% to 20% per annum.
At the same time, the National Bank stresses that despite these measures the country's main financial regulator “will retain the rigidity needed to maintain macroeconomic and financial stability in the country”.
As it was previously reported, head of the IMF mission Chris Jarvis said, summing up the regular mission in Belarus on March 5, that it was premature of the Belarusian authorities to have decided on the refinancing rate reduction.
Chris Jarvis explained that the refinancing rate could be lowered subject to reduction of the basic interest rates of the National Bank, as well as interest rates on loans. In other words, this requires better stability of the financial system and lower inflation expectations of the population.
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