BELARUS NEWS AND ANALYSIS

DATE:

16/05/2008

Belarussian central banker puts H1 inflation at 6.5-7.5%

MINSK. May 16 (Interfax) - The head of the National Bank of Belarus, Pyotr Prokopovich forecast that inflation will be 6.5% to 7.5% in the first half of 2008.

"What will happen next - we'll see. Prices, as a rule, rise more slowly in the third quarter," Prokopovich said at a press conference on Thursday.

He also did not rule out that the central bank might raise its refinancing rate this year if average monthly inflation continues to exceed 1%. However, "if inflation in future is less than 1% on average per month, then there will be no need to raise the refinancing rate."

Inflation was 5.3% in the first four months of 2008, averaging 1.3% per month. This exceeds the forecasts of the government and National Bank, Prokopovich conceded.

Commenting on the monetary policy outline that the central bank is drafting for next year, Prokopovich said that "the refinancing rate next year will depend on other issues."

"If the global trend of rising prices does not change, naturally we won't be able to freeze them, and our interest rate policy will be drawn depending on this," he said.

Prokopovich said the central bank's current interest policy was justified and balanced, despite the negative real return on deposits and loans due to inflation.

The average interest rate on retail ruble deposits was 13% in April, but retail deposits are growing steadily and comprise more than 25% of banks' resource base, he said.

Prokopovich also forecast that GDP will grow by at least 11% in 2009, and capital investment will increase by at least 25%.

Prokopovich said the National Bank intends to restore its gold and foreign exchange reserves to $5.5 billion in July. "The annual forecast for increasing gold and forex reserves is $5.5 billion. We plan to meet this goal in July 2008," he said.

The reserves should grow to $10 billion in 2010, which will be equivalent to three months of imports, he said.

The National Bank's reserves stood at $5.3 billion on May 1, up 150% year-on-year but down from $5.5 billion a month earlier.

Source:

http://www.interfax.com/3/394164/news.aspx

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