UPDATE 1-Belarus maintains rates despite rising inflation, cancels schedule for political meetings

(Add analyst comments, details, background)

MOSCOW, March 12 (Reuters) – Belarus’ central bank unexpectedly announced on Friday that it was canceling its rate-setting schedule for the rest of the year after keeping its main interest rate at 7.75% despite rising inflation.

The central bank gave no reason to leave the rate unchanged, but analysts suggested it was aimed at supporting state-owned enterprises struggling with debt – even at the expense of keeping inflation under control.

Giant state-owned companies are the backbone of the economy under President Alexander Lukashenko, who has faced more than six months of protests and strikes in the biggest challenge to date since his 27-year reign.

Annual inflation climbed to 8.7% on March 1, from 7.7% a month earlier. The central bank originally scheduled its rate-setting meeting for February, but postponed it to analyze the factors behind the price increase.

The central bank said it would now hold policy meetings when needed, adding that it was expanding existing money market restrictions.

“The main objective is to ease the pressure on public enterprises and improve their situation. Almost all loan agreements are tied to the rate (central bank principal), ”said Dzmitry Kruk, a researcher at the Belarusian Center for Economic Research and Awareness (BEROC).

“Otherwise, payments on all loans issued would have to be increased,” he said.

The debts of the largest state-owned enterprises amount to around 14% of Belarusian gross domestic product (GDP), according to a central bank estimate earlier this year.

The government has previously urged the central bank to relax its policy and reduce the cost of lending to support the economy.

“This means the definitive loss of independence of the National Bank. Faced with rising inflation, raising the rate was the only reasonable decision, ”said Vadim Iossub, senior analyst at Alpari Eurasia.

“Such decisions mean that the authorities do not care about long-term financial stability,” he added. (Reporting by Anastasia Teterevleva and Gleb Stolyarov; Writing by Alexander Marrow and Matthias Williams; Editing by Maria Kiselyova and Hugh Lawson)

Source link

About Eric Hudkins

Check Also

“Student Loans Are Finance’s Cockroach Motel”: Thousands Buried Under University Debt Call for Relief

(WGN) – As the nation’s student loan balance hovers around $ 1.7 trillion, the struggles …

Leave a Reply

Your email address will not be published. Required fields are marked *