The bank’s monetary policy committee also lowered its overnight lending rate from 46 per cent to 43.5 per cent and the overnight borrowing rate from 41.5 per cent to 39 per cent, the bank said in a release.
The bank had in April this year hiked rates to 46 per cent to cool markets following political shake-ups; it is now shifting back toward easier policy as inflation has hit above 33 per cent.
The underlying trend of inflation slowed down in August. While gross domestic product (GDP) growth was above projections in the second quarter, final domestic demand remained weak. Recent data indicate that demand conditions are at disinflationary levels.
“The tight monetary policy stance, which will be maintained until price stability is achieved, will strengthen the disinflation process through demand, exchange rate, and expectation channels. The macroeconomic framework outlined in the Medium-Term Programme will contribute to this process,” said the press release.
The committee has a 5-per cent inflation target in the medium term.
ALCHEMPro News Desk (DS)
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