Press release

The refinancing rate will be increased to 8.5% per annum on April 21, 2021

On April 21, 2021, the refinancing rate will total 8.5% per annum; the overnight credit rate – 9.5% per annum; and the overnight deposit rate – 7.5% per annum.

Corresponding decisions were taken by the Board of the National Bank of the Republic of Belarus based on the results of the meeting on the monetary policy held on April 14, 2021, with account of the complex of external and internal factors influencing the current and future dynamics of consumer prices.

At the end of 2020, the inflationary processes accelerated, that was caused by the pass-through of the occurred depreciation of the Belarusian ruble into prices, as well as the shocks of supply in the markets of certain foodstuffs.

At early 2021, inflation continued to accelerate under the impact of further increase in global prices for foodstuffs, as well as for the imported non-foodstuffs, the consumer prices for which went up due to the increased logistical expenses and disruptions in supply due to pandemic.

An additional proinflationary impact in the Belarusian domestic market was generated due to abolishment of VAT privileges.

The above-mentioned factors, on the background of the accelerated inflation and its long-term deviation from the level of 5%, led to the increase in the inflationary expectations, that is confirmed by the results of the population survey and monitoring of enterprises. As a result, the list of goods and services of the consumer basket, the prices for which started to grow at higher rates, expanded. At the end of March 2021, the increase in consumer prices totaled 8.5% per annum.

With a view to curbing inflation, the National Bank took a set of measures within the monetary targeting regime designed to strengthen control of money supply.

In the global economy an excessive inflationary background is expected in the near future, that is underpinned by the conduct of a stimulating monetary policy by a number of industrialized countries. A high inflation is also expected in the countries being main trade partners of Belarus. Thus, according to the forecasts of the Bank of Russia, the growth of consumer prices in the Russian Federation will slow down up to the benchmarks no earlier than in 2022 H2.

At the same time, a more crucial impact on inflation in Belarus may be made by the shocks of the prices on foodstuffs, as well as by the consequences of pandemic with regard to an increase in the prices on imported non-foodstuff goods.

In aggregate, the above-mentioned factors set preconditions for a long-term preservation of heightened inflationary expectations of the economic agents, increasing thereby the risks of continuation of excessive inflation in future.

At the same time, a weak consumer and investment domestic demand will curb inflation to a certain degree.

Under these conditions, the Board of the National Bank took a decision to increase the refinancing rate by 75 basic points for the purpose of limiting proinflationary risks and strengthening control of money supply.

With account of the impact of all factors, a decline in the quarterly rates of the consumer prices growth is forecasted since 2021 Q2 already. At the same time, the previously occurred acceleration will be reflected in annual inflation till the end of the current year. It is expected that the annual growth rate of prices will increase in Q2 compared with the current value and subsequently decline at the year-end. In December 2021, the increase in consumer prices is evaluated at about 7%.

In future, annual inflation will continue to slow-down and since 2022 Q2 is evaluated at the level of the medium-term target – close to 5%.

When the monetary policy issues are considered, the Board of the National Bank will continue to proceed from the need to maintain price stability. The decisions being taken will be based on the comprehensive analysis of external and domestic factors having regard to the duration of their impact and possible spillover effects, as well as on the assessment of inflationary risks.