National Bank of Belarus may cut rate to 23G if inflation slows

MOSCOW, Jan 27 (Reuters) – The National Bank of Belarus will continue to cut its refinancing rate in 2023 if inflation slows and there are no new external shocks, according to a report released by the regulator.

Earlier, the National Bank on January 23 reduced the refinancing rate to 11.5% from the previous 12%. The regulator predicts that the average rate in 2023 will be around 10-11%.

Inflation in Belarus rose to 12.8% last year from an initial annual forecast of 6%. The regulator believes that the main reason for the high inflation last year was the Western sanctions imposed against Belarus.

“Today, we see that the short-term effect of the imposition of sanctions has dissipated and the peak of high inflation has been passed,” the report said.

To control prices, Belarus imposed severe restrictions on its development last autumn, including criminal prosecution of violators of price discipline.

“Expectations of inflation and devaluation of households and businesses remained the main internal drivers of inflation during the year. The practice of taking into account undue risks and costs in pricing has become widespread in the country.

For this year, officials predict a slowdown in inflation to 7-8%. (Moscow Bureau)