The required reserve ratios for banks and for attracted funds in freely convertible currency were also maintained at the current level.
According to the NBM, today’s decision was made based on the previous arguments – to limit inflation expectations. Thus, the restraining measures of the monetary policy continue to be in force, given the delay in their introduction.
At the same time, the regulator hints at the possibility of future easing of restrictive measures. It is predicted that inflation will have a steady downward trend by the end of the current year. Such expectations are primarily due to the weak recovery of domestic demand. And this will have a general disinflationary impact on the rate of price growth.
At the same time, disinflationary impact may also be caused by negative global demand as a result of trade conditions imposed by the USA. Nevertheless, the NBM notes that domestic economic activity and inflation continue to be influenced by the effects of supply shocks. In particular, due to the increase in regulated tariffs in the last two quarters and the decline in agricultural production.
Recent macroeconomic indicators support the underlying assumptions and conclusions that influenced today’s decision. With subsequent monetary policy adjustments, the NBM intends to bring back and keep inflation within ± 1.5 p.p. of the 5% inflation target in the medium term. The next monetary policy meeting is expected in mid-June.
