National Bank of Belarus Drops Rate 500bps to 38.00%

The National Bank of the Republic of Belarus cut its refinancing rate by 500 basis points to 38.00% from 43.00%, effective 1 March, reversing a string of aggressive rate hikes.  The Bank said [translated]: "in recent months, there is a significant slowdown in inflation. Thus, the consumer price index for December 2011 amounted to 102.3 percent for January 2012 - 101.9 per cent, for two weeks of February - 100,9 percent. As a result, interest rates in real terms on deposits from January 2012 confidently anchored in a positive value at a sufficiently high level. The dynamics of time deposits reflects the increased savings of the population processes in the economy and the growth of confidence in the banking system."

The bank also dropped the rate by 200 basis points earlier this month, and last hiked the rate by 500 basis point for the third time in a row in December last year.  The bank increased the rate a total of 3450 basis points in 2011.  Belarus reported consumer price inflation at hyperinflationary levels of 109.7% in January this year, up from 92.3% in October, up from 79.6% in September, and 36.2% in the year to June, according to the National Statistic Committee.  

Senior Bank officials have previously noted a desire to reduce the rate to around 20% this year.  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 8140 (5350 in September) against the US dollar, according to quotes from Yahoo Finance.

www.CentralBankNews.info