Interest Rate Policy of the National Bank

The interest rate policy of the National Bank of the Republic of Belarus is a complex of measures designed to regulate the price of money in the economy and is a part of the monetary policy.

The purpose of the interest rate policy of the National Bank of the Republic of Belarus is maintenance of the whole complex of interest rates (in Russian only) of the money and credit and deposit markets at the level complying with the intermediate and the main purpose of the monetary policy, having regard to the need of ensuring financial stability and stable development of the economy.

The National Bank implements the monetary policy by setting the refinance rate and the rates on standing transactions involving regulation of banks’ liquidity, as well as carrying out transactions designed to regulate the banks’ liquidity.

The refinance rate is the rate of the National Bank of the Republic of Belarus, which constitutes the basic instrument of regulating the level of interest rates in the money market and serves as the basis for setting interest rates on the transactions involving provision of liquidity to banks.

The rates on standing instruments regulating banks’ liquidity form the corridor of interest rates. The use by the National Bank of the Republic of Belarus of the corridor of interest rates is aimed at limiting the fluctuations of interest rates of the interbank credit market.

The transactions involving regulation of banks’ liquidity are aimed at attaining the operational monetary policy target. The main open market transactions, which may be carried out in the form of credits, swap transactions, issuance of bonds, direct and reverse repos and deposits, play the key role in regulation of banks’ liquidity. By means of carrying out the main transactions in the open market the National Bank of the Republic of Belarus forms the required level of the rates on intraday interbank credits in Belarusian rubles.

The decisions on the level of the refinance rate and the rates on standing instruments designed to regulate banks’ liquidity are taken by the Board of the National Bank of the Republic of Belarus.

The Committee on Transactions in the Financial Markets of the National Bank of the Republic of Belarus is in charge of elaborating and taking decisions on carrying out transactions involving regulation of banks’ liquidity.

FREQUENTLY ASKED QUESTIONS (FAQ)

The use of the interest rate policy instruments makes it possible for the National Bank of the Republic of Belarus to make a direct impact on the level of the short-term interest rates of the interbank credit market, thereby ensuring the attainment of the monetary policy operational target.

A change in the short-term interest rates of the interbank credit market leads to the change in the short-term and, subsequently, in the long-term interest rates on bank credits and households’ and enterprises’ deposits.

A change in the rates of credit and deposit market makes an influence on the saving and investment processes in the non-financial sector of the economy and the households sector, that is reflected in the dynamics of credits issuance and demand in the economy. As a result, the broad money supply is changed, that is reflected with a certain time lag in the inflation dynamics.