High time to calculate interest rates

Refinancing rate has reduced from 20 to 18 percent

Refinancing rate has reduced from 20 to 18 percent, thus having fallen by 7 percent since the beginning of the year, making loans cheaper, as well as profitability from deposits



The major financial regulator has decided to make another reduction due to several reasons. Firstly, the low growth of inflation and the state of the country’s payment balance had their role to play. Secondly, this step will bring benefit to organisations which return loans, since this reduces risks for financial stability.

“If we analyse the dynamics month by month we may see a small growth in separate months but it doesn’t exceed the sum of interest accrued. So we may assert that actually banks don’t receive new money, except only for July which saw an increase in Rouble deposits by 2.3 percent. This means that Belarusians made new deposits in July. We can also suppose that this is connected with recent strengthening of the Belarusian Rouble and the reduction of devaluation expectation in society, as well as payment of holiday allowances,” Zhanna Kulakova, an expert and analyst, explains.

Starting from spring the deposits in Belarusian Roubles bring good revenue, including due to Rouble strengthening. However, risks for foreign currency market still remain. According to Ms. Kulakova, the reduction of the refinancing rate makes Belarusian Rouble deposits less attractive. However, the National Bank notes that the interest rates still exceed the level of inflation, so there won’t be a large-scale outflow of deposits.

Meanwhile, we won’t see a tangible inflow either. Alongside the reduction of the Belarusian Rouble deposits, those in foreign currency also fall: since the early 2016, it has already dropped by 5.91 percent. This evidently testified to the fact that the withdrawn Rouble deposits aren’t transferred into foreign currency but are spent on consumption. As far as the question ‘which currency is better to keep money in?’ is concerned, experts still recommend to diversify savings, i.e., to keep them in various currencies.

By Kristina Poletaeva
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