The National Bank of the Republic of Belarus hiked its refinancing rate by another 500 basis points to 45.00% from 40.00% on the 12th of December. The Bank said [translated]: "Further tightening of monetary policy is warranted due to the necessity of fixing the positive trends in the balance of payments and foreign exchange market. Besides these measures will reduce inflation and devaluation expectations in the economy, which would be more limiting factor by way of the growth rate of prices. The National Bank will continue to monitor the situation in the economy and monetary developments and to take the necessary decisions on interest rate policy."The latest move marks a continued string of aggressive rate increases, with the move being the third 500 basis point increase in a row. The total amount of increases since the start of the year is now 3450 basis points. Belarus reported consumer price inflation at hyperinflationary levels of 92.3% in October, up from 79.6% in September, and 36.2% in the year to June, according to the National Statistic Committee, meanwhile the government is forecasting 2011 inflation of as much as 39%.
The Bank also said that interest rates on liquidity management operations would also increase, with the overnight deposit rate rising to 30% and the overnight credit rate rising to 70%. The USD-Belarussian ruble (BYR) exchange rate has doubled on the black market, rising to as much as 7,000 per dollar (approx. 6,000 in July), and currently trades around 8510 (5350 in September) against the US dollar, according to quotes from Yahoo Finance.
45% - wow, but even so, look at the inflation rate, 80% or 90%... that means real interest rates are still negative by a large amount.
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