National Bank to reduce refinance rate to 10 percent on October 1

The National Bank of Belarus (NBB) will lower its base refinance rate by 0.25 percentage point to 10 percent on October 1, one month after the previous reduction.

According to the NBB, the decision was made considering the economic and financial stability in Belarus.

The NBB raised the base refinance rate from 10 to 11 percent on February 1 to make the interest rates on rubel deposits more attractive amid surging demand for foreign cash at the beginning of the year but then lowered it 10.75 percent on July 1, to 10.50 percent on August 1 and to 10.25 percent on September 1.

Belarus' consumer prices rose by 4.4 percent in the first eight months of 2007, the NBB press office said.

The reduction of the base refinance rate is aimed at making bank loans cheaper and access to them easier, as specified in the country's monetary policy guidelines for this year, the press office explained.

Following the move, the refinance rate will still remain higher than the inflation rate and allow rubel deposits with banks to be more profitable than deposits in foreign currencies, the press office added.

The government had projected the base refinance rate at seven to nine percent at the end of 2007 and banks' interest rates at 10 to 12 percent.