Tunisia: BCT raises key rate by 75 basis points to 5.75%

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    The Executive Board the Central Bank held its regular meeting on March 5, 2018 and decided to raise the BCT’s key interest rate by 75 basis points from 5% to 5.75%.

    This action is decided to face real risks of a continuation of inflation in 2018, having already reached 7.1% in February against 4.6% in the same month of the year 2017 and 5.3% on average in 2017, said the CenBank.
    An acceleration of inflation was recorded at the beginning of this year, mainly due to the sharp rise in the consumer price index (CPI) in January 2018 by 1.1% (compared with 0.4% in December 2017). ).
    In anticipation of this acceleration of inflation, the Executive Board has already decided at the end of December 2017 to extend the corridor to 100 basis points on either side of the BCT’s key rate, giving rise to a rate of marginal lending facility of 6%.

    Following this significant action on the corridor, the MMR increased to 5.61% in February 2018, which calls for an adjustment of the policy rate in order to ensure a coherence of money market rates.
    On the other hand, a number of cyclical indicators put forward, particularly the likely surge in international commodity prices and especially energy predict further inflationary pressures in the coming period.
    The central bank’s concern to preserve the citizens’ purchasing power and to promote the conditions for sound growth, the beginnings of which are starting to emerge in early 2018, motivates proactive action by tightening monetary policy by relying on the interest rate as a preferred instrument for better allocation of financial resources.

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