Monetary stimulus will shrink in 2024, but not enough to address threats to macroeconomic stability.
Monetary conditions remained loose in Q1-2024 in Belarus, but their stimulus for economic activity decreased due to higher interest rates in the credit and deposit market. The foreign exchange rate provided limited support to price competitiveness and a moderate pro-inflationary impact at the beginning of 2024. In the context of growing overheating of the economy and expanding risks for price stability, a further narrowing of the monetary stimulus from market interest rates is expected because of the National Bank’s actions. At the same time, the response is expected to be limited and delayed due to the Bank’s lack of independence from the executive branch.