Central bank keeps key policy rate unchanged

Central bank keeps key policy rate unchanged

Taking into consideration the expected depletion of effects of low food prices and the risks that may adversely affect economic developments at home in the coming period, the NBS Executive Board decided to keep the key policy rate on hold, reads the reasoning behind the decision.

Year-on-year inflation is moving below the lower bound of the target tolerance band and is expected to return within the target band by the year-end, says a release published on the central bank's website.

Such movements are attributable to low inflationary pressures, reflecting mainly low aggregate demand and the continuing disinflationary impact of prices of primary agricultural commodities, relative stability of the dinar exchange rate and inflation expectations, the release notes.

In taking the decision, the NBS Executive Board also took into account the persistent uncertainties emanating from the international environment, which may negatively impact the country's risk premium and foreign capital flows.

The risks of further heightening of geopolitical tensions also relate to the postponement or slowdown of the initiated economic recovery of euro area, notes the release.

The NBS Executive Board expects that consistent implementation of fiscal consolidation measures and structural reforms in the period ahead may contribute to the alleviation of external risks.