Bielorrusia Actividad económica May 2023

Bielorrusia: Central Bank cuts rates for the second time in a month in May

On 31 May, the National Bank of the Republic of Belarus (NBRB) cut the refinancing rate by 25 basis points to 9.75%. This marked the second rate cut in the past month, following the 50 basis point cut on 2 May. Additionally, the Bank decided to lower the interest rates on overnight loans and overnight deposits by 25 basis points each, to 10.75% and 8.75%, respectively.

The Bank’s decision was likely motivated by a sustained drop in price pressures following the introduction of price controls in October 2022: Inflation eased further to 4.6% in April from 5.8% in March. A high base effect from the outset of the war in Ukraine has further supported the inflation moderation so far this year.

In its forward guidance, the Bank stated that upcoming decisions would be based on inflation and inflation expectations, internal and external risks to the outlook, and the response of financial markets to said risks. Our panel anticipates the key policy rate to ease further by year-end, as the Bank balances inflationary risks and an ailing domestic economy.