National Bank advocates stronger operational independence to create conditions for lower inflation

<p> MINSK, Nov 24 - PrimePress. The National Bank of Belarus (NBB) stands for strengthening its operational independence in order to create conditions for reducing inflation in the country. This was stated by NBB representatives during a roundtable on November 24. </p> <p>   </p> <p> It was said at the event that Belarus has set a goal of switching from monetary targeting to inflation targeting. In order to implement the transition, Belarus has not yet created a number of prerequisites. </p> <p>   </p> <p> “The National Bank does not have sufficient operational independence. The practice of directed lending in the economy persists, which reinforces non-market mechanisms for doing business. Recently, there has been increased government interference in the price formation process, which is not conducive to the development of market mechanisms for the allocation of resources in the economy. The economy remains highly monetised and the infrastructure and instruments of the stock market are underdeveloped, which limits the work of the interest rate channel and the effectiveness of monetary policy,” said Natalia Mironchik, head of research and strategic development at NBB. </p> <p>   </p> <p> She said that she sees the main challenge as reaching a consensus that low inflation is a public policy priority and a basic condition for sustainable economic growth. </p> <p>   </p> <p> “We propose that the head of state should approve a three-year inflation target for the National Bank every year (currently it is a yearly target)... We propose to prescribe in the Banking Code and give the National Bank the right to make its own macro-forecasts. They may differ from the government’s forecasts and are necessary to achieve their goals for inflation and stabilization of output near the equilibrium level,” Mironchik said. </p> <p>   </p> <p> The economic authorities need a consensus on the importance of achieving low inflation, said Mikhail Demidenko, deputy head of the research and strategic development department of the National Bank. </p> <p>   </p> <p> “A consensus needs to be reached by the National Bank, the government and society, so that there would be no ideas of “tweaking”, inventing something and printing money without consequences. We need a transparent, clear, reliable and trustworthy policy of the National Bank. It requires operational and non-operational independence of the National Bank. It requires the National Bank to be able to make its own forecasts, to share them with the public, to be responsible to the extent of what depends on it for inflation. When everyone is responsible for everything, the National Bank and the government, the result is high inflation, no one is to blame. There should be a clear separation. The goal of the National Bank is, first and foremost, low inflation; the goal of the government is to stimulate economic development,” Demidenko said. End </p>

2021-11-25

Primepress