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National Bank to lower refinance rate to 11 percent

The National Bank of Belarus (NBB) will lower its base refinance rate from 11.5 to 11 percent on August 18, BelaPAN reports.

According to the NBB press office, the decision to further lower the refinance rate is aimed at bringing down the general level of interest rates on bank loans.

“This is an important factor for ensuring economic growth and modernizing and reforming production processes with a view to reaching a qualitatively new level of the social and economic development of Belarus,” the press office said.

The stable economic situation in the country and low inflation have made it possible to cut interest rates, the press office explained.

Interest rates on individuals’ bank deposits in Belarusian rubels will remain higher than the inflation rate and considerably higher than interest rates on deposits in foreign currencies, the press office noted.

Projected to be between nine and 12 percent at the end of the year, the NBB’s base refinance rate was lowered from 13.5 to 13 percent on February 17, to 12.5 percent on April 19, to 12 percent on May 12, and to 11.5 percent on July 14.

While speaking to reporters in January, NBB head Pyotr Prakapovich said, "We're changing our attitude to the interest rate policy in 2010 and gradually moving to the level of the interest rates that were in place before the crisis."

This means that the interest rates on new deposits will equal the refinance rate and the interest rates on loans will exceed it by no more than three percentage points, Mr. Prakapovich said.

The NBB's base refinance rate peaked at 14 percent in January 2009, up four percentage points from the summer of 2008.