The Central Bank is increasing its monetary policy interest rate by 25 basis points, from 7.75% to 8.00% per year. The measure is the latest step as the government seeks a balance between GDP growth and inflation.
Thus, the rate of the permanent liquidity facility (1-day Repos) increases to 8.50% annually and the rate for interest-bearing deposits (Overnight) to 7.50% each year.
The Central Bank explains the decision is taken after assessing the performance of the world economy and its impact on inflation, given the geopolitical conflicts and the global cost shock.
The Central Bank says that price dynamics continue to be affected by external factors that are more persistent than expected, associated with the extraordinary increase in oil prices and other raw materials, and the high costs of international freight transport and other disruptions in supply chains.
In addition, domestic inflation has been influenced by the second round effects of these external components and by domestic demand pressures. Yet, he said the economy has recovered significantly from pre-pandemic levels.
In particular, the consumer price index (CPI) monthly variation stood at 0.50% during July 2022, while inter-annual inflation, over the last 12 months, stood at 9.43%. This compares to the peak inflation of 9.64% in April 2022. The expectation is that inflation will continue to drop. Inflation declined from 7.29% in May to 7.10% in July.
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N Digital
31 August 2022