Belarus’ central bank comments on monetary policy targets

As Andrei Kartun noted, the National Bank is not abandoning its medium-term goal of 5% annual inflation, although in 2025 it will be somewhat higher, at around 7%. This indicator is influenced by prices for imported goods. For example, prices for cocoa beans and coffee have increased, which has affected the cost of chocolate and confectionery. This explains the price growth in these segments. Domestic producers are forced to react to the situation on global markets. The increase in coffee prices alone contributed about 0.2% to inflation.

“Taking into account the risks that are projected and already visible, we have set the inflation ceiling at 7%,” Andrei Kartun said.

He identified 10 main categories of goods and services that together account for 70-80% of inflation. These include meat and dairy products, utility services, and household and other services. For certain product groups and services, government price regulation applies. Tariffs for some of them, in particular for urban transportation, have remained virtually unchanged for a long time, while costs and, accordingly, subsidies have increased.

“The National Bank sees its task as keeping core inflation (excluding seasonal and regulated factors) at no more than 5%,” Andrei Kartun said.

International Reserves – No Less Than $9.2 Billion

The deputy chairman of the Board of the National Bank noted that the target for international reserves is somewhat conservative. In October of this year, the country updated the historical high as its international reserves increased to the equivalent of $13.284 billion.

“This is primarily influenced by the rise in global gold prices. When the forecast was being prepared, we did not anticipate such dynamics in gold prices, which essentially exceeded the historical maximum. Prices have since retreated somewhat, but nevertheless, we are being very conservative in our estimates. We are not assuming that gold prices will continue to rise rapidly. We are approaching this with caution. If gold prices are maintained, then, of course, our reserves will be significantly higher. Additionally, the prevailing conditions in the foreign exchange market have allowed us to purchase foreign currency and build up reserves,” Andrei Kartun explained.

The National Bank expects a balanced foreign exchange market next year.

“This factor will not affect either the growth or the decline of international reserves. Nevertheless, we see that we have sufficient reserves to smooth out volatility in the foreign exchange market. However, the second most important factor that will affect or could lead to a decrease in reserves compared to the actual level is the government’s foreign currency obligations. Next year, we face one of the peak periods for external debt repayments in foreign currency. A decision has been made to refinance less and repay more of the external debt, to allow the economy to ‘breathe’ more freely,” Andrei Kartun explained.