Belarus maintains rate and neutral policy stance

     Belarus' central bank kept its benchmark refinancing rate steady at 10.0 percent and maintained its neutral policy stance by saying future decisions about the interest rate will depend on the direction of how the balance shifts between inflationary and deflationary factors.
     The National Bank of the Republic of Belarus, which has maintained its rate since cutting it by 50 basis points in June 2018 as part of an easing cycle begun in April 2016, added that preserving its inflation target for 2019 without changing the monetary conditions contributed to keeping the refinancing rate steady at a time of uncertain external conditions.
     In December the central bank estimated inflation at the end of 2018 would not exceed 5.50 percent and reach maximum of 6.0 percent.
     In fact, inflation rose to 5.6 percent in December from 5.0 percent the previous month and the central bank expects a temporary acceleration in inflation at the beginning of 2019 due to higher prices of imported goods and services.
     But as the factors fade, consumer prices are expected to slow and be close to the bank's target of 5.0 percent by the end of 2019-2020.
     The economy of Belarus slowed last year with the annual growth in gross domestic product at 2.3 percent in the third quarter, down from 3.9 percent in the second and 5.2 percent in the first quarter.
     Earlier this month the International Monetary Fund (IMF) said prudent monetary policy and growing credibility of the central bank was helping keep inflation at historically low levels, along with a relatively stable exchange rate, despite rapid wage growth.
     The IMF also supported the current monetary policy stance and welcomed further progress towards inflation targeting and commended authorities for the liberalization of the foreign exchange market.
     The IMF forecast economic growth in 2019 of 2.4 percent, down from 3.7 percent in 2018, and 2.3 percent growth in 2020.
     Inflation was seen averaging 5.0 percent this year, down from 5.4 percent in 2018, and 5.0 percent in 2020.

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