Disinflation could prompt National Bank to lower interest rates in economy

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May 15, 2017 12:23

According to Belstat, in April 2017 consumer prices increased by 0.7%, and since early 2017 inflation totalled 2.4%. April is traditionally characterised by seasonal growth in prices for fruit and vegetable products, which leads to an overall hike in prices for food products. Control over pricing policy is likely to persist, including through administrative means. The stability of the BYN is likely to have a stabilising effect on the prices of imported goods. Wage growth is unlikely to have a significant impact on consumer demand due to further increases in tariffs for utility and housing services. The main factor which may have an impact on price hikes, except seasonal one, is overemployment and pay rises in order to meet the president’s requirement – enterprises’ production costs would grow, hence, the final price of produces would increase. The target inflation forecast for 2017 was 9%. Currently, inflation in Belarus has slowed down to 6.3% per annum, enabling the National Bank to take further steps to reduce interest rates in the economy and help reduce enterprises’ loan servicing costs.

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