Monetary conditions in Belarus reached a neutral level in Q3-2024.
The interbank market rate remained nearly unchanged from Q2-2024 and stayed significantly below the neutral level. The National Bank’s increase in reserve requirements proved ineffective in an environment of fiscal dominance, characterized by ruble issuance through National Bank purchases of government bonds. Interest rates on loans and deposits for individuals and firms rose in Q3-2024, reaching neutral levels. The Belarusian ruble slightly appreciated against a currencies basket and remained moderately undervalued due to significant net foreign currency supply on the domestic market. The substantial overheating of the economy and the prevalence of inflationary risks suggest the need for a moderately tight monetary policy. However, due to the institutional weakness of the National Bank, this outcome is unlikely. The baseline scenario anticipates maintaining near-neutral monetary conditions, which will be insufficient for the economy’s quick return to a balanced state.