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27 Jul 2017

Belarus’ central bank highlights positive signs in H1 2017

MINSK, 27 July (BelTA) - There are positive trends in the monetary sector in the first half of 2017, BelTA learned from the information and public relations department of the National Bank.

Results of the monetary policy in H1 2017 were considered at the enlarged meeting of the Board of the National Bank of the Republic of Belarus on 27 July 2017.

The coordinated policy of the National Bank’s and the government to ensure the macroeconomic balance contributed to the effort to constrain inflationary processes. In June, the annual growth rate of consumer prices went down to 6.5% from 10.6% in December 2016. In June 2017, core inflation was 5.3% in annual terms.

A decline in actual inflation coupled with the confidence in the stability of this process made it possible for the National Bank to reduce the refinancing rate in H1 2017 that led to a decrease in the interest rates in the credit and deposit market as well.

The dynamics of lending remains low on the background of excessive liquidity. In the corporate segment lending is constrained by low effective demand of enterprises. On the whole, the disinflationary impact of domestic demand is still in place, despite the intensification of consumer lending in Q2 2017.

The trend towards reduction of deposits in foreign currency, with the National Bank’s foreign exchange liabilities being declining, continues in the deposit market, reflecting the de-dollarization processes.

In H1 2017, the gold and foreign exchange reserves increased while the National Bank’s foreign exchange liabilities declined.

The inflationary expectations in the economy are going down, though they are still rather high. At the end of Q2 a quicker recovery of the households’ incomes and consumer demand growth was observed. Coupled with the growth of prices for foodstuffs in June this may affect further slow down in the inflation rate.

In H2, the National Bank will continue to implement the monetary policy aimed at constraining the rate of inflation and maintaining macroeconomic balance. In the future, a possible reduction of interest rates will depend on the macroeconomic situation as a whole, the price growth (the medium-term target is no more than 5% by 2020), and the balance of payments of the Republic of Belarus, the National Bank informed.

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