Monetary conditions remained non-restrictive in Q1-2026 and are expected to be moderately accommodative in the second half of the year
The National Bank maintained its focus on stimulating economic activity at the beginning of the current year and relied on strict price controls by the government to contain inflation. Accommodative monetary policy was reflected in maintaining a negative real interbank market rate and yields on corporate deposits below their neutral level. The average interest rate on ruble-denominated loans declined in nominal terms in Q1-2026, but still slightly exceeded its equilibrium real value amid elevated uncertainty about economic prospects. As a result, the overall state of interest rates in the credit and deposit market was close to neutral in Q1-2026, while the Belarusian ruble exchange rate remained near equilibrium.
The non-restrictive nature of monetary conditions in an environment of high fiscal expenditure was accompanied by accelerated growth of the money supply and an increase in the money overhang in Q1-2026. A high share of ruble savings by households largely mitigated the inflationary consequences of unbalanced money supply growth. The expected inflation path of around 6–7% YoY this year and modest GDP growth of about 1% YoY leave the National Bank with room to ease monetary conditions. However, the need to maintain high household savings rate to ensure foreign exchange market stability limits the scope for interest rate cuts.