National Bank warns of monetary policy tightening
The National Bank of Belarus (NBB) on Wednesday announced its decision to tighten monetary policy in 2014 but said that it would continue securing high interest on rubel deposits.
The NBB press office said that the decision was made at a meeting of the Bank’s board on January 3.
The tightening of monetary policy is likely part of the authorities’ efforts to meet conditions attached to foreign loans, which Minsk desperately needs amid a widening foreign trade deficit and the need to pay billions of dollars in debts.
The NBB announced plans to take measures to make bank lending more efficient and limit an increase in lending to the economy to an average of 0.7 percent per month in the first quarter of this year. Such a rate of lending increase is in line with the yearly target and will secure economic development without leading to macroeconomic imbalances, said the press office.
The NBB also decided to tighten its approaches to providing loans to the banking sector, discouraging banks from spending more money than they have at their disposal.
According to the press office, the National Bank’s base refinance rate will not be changed in January, while its future changes will depend on inflation and the situation in the financial market. “Maintaining yields on rubel deposits at a higher level than yields on deposits in a foreign currency and that safely protects savings from inflation will remain the key principle of interest rate policy in 2014,” said the press office.
The press office stressed that the rubel’s exchange rate would continue to be determined by market forces this year, with the National Bank intervening only to prevent sharp fluctuations in the rate.
The NBB board also approved a plan of action to implement this year’s Monetary Policy Guidelines, which is aimed at containing inflation and securing a balanced economy, said the press office.