The BCT Board of Directors reviewed the latest economic and financial developments and decided to increase the key rate of the Central Bank of Tunisia from 25 base points to 7.25 %. As a result, the 24 -hour marginal deposit facilities are 6.25 % and 8.25 % respectively. This decision will come into effect from October 6, 2022.
Furthermore, the Board of Directors has decided to increase the rate of savings remuneration (TRE) of 25 base points to 6.25%.
The board of directors of the Central Bank of Tunisia met on October 5, 2022, and examined recent economic and financial developments and the prospects for inflation.
Internationally, growth in the major economies has recently weakened, and the prices of basic products and raw materials, particularly oil, continued their downward direction although remaining at high levels, while global inflation has been set at historically high levels. Central banks, while concentrating on their price stability mandate, continue to tighten their monetary policies, leading to a notable hardening of international monetary conditions.
The restrictive orientation of monetary policies of the major economies is likely to grow during the coming period, confronted with particularly significant inflationary pressures which are looming on the horizon and which should be fueled by the energy crisis which hovers over Europe as winter approaches. The development dynamic of the international economy should slow down which has led several international institutions to rework their projections of global economic growth.
On the national level, economic activity waned in the second quarter of 2022, in particular against the counter-performance of non-manufacturing industries. In addition, the good performance of the activity of manufacturing industries, in particular exporters, during the first half of 2022, which continued in recent months, has helped the country’s exports. Also, domestic demand has enhanced after lifting all health restrictions, therefore distinguishing pressures on import flows.
As for consumer prices, the Council remarks on the continuation of the accelerated and generalized growth in inflation which reached 8.6% in August 2022, the highest level reached in more than three decades. In particular, the Council notes that the underlying inflation “excluding fresh food and products at administered prices”, a measure of the fundamental trend of inflation, speed up to attain 8.5% in August 2022 after 8, 2% the previous month and 5.3% a year earlier.
In terms of the outside sector, the Council takes notice of the accentuation of the digging of the current deficit which amounted to -5.8% of the GDP during the first eight months of 2022 opposed to-3.6% a year earlier, Due to the decline of the commercial balance (-10.1% of GDP against -6.6% at the end of August 2021). The level of exchange reserves was set at 23,848 TND (or 112 days of imports), on September 29, 2022, against 23,313 TND or 133 days at the end of 2021.
The Council believes that inflationary pressures would stay active and predict the impact of both internal and external factors, which are currently intensifying pressures on consumer prices, persist during the coming quarters. In particular, the weakness of the prospect for the production of the economy in the face of progressive demand is a source of primary inflationary tension, which could support the significant bullish effects from the outside.
The Council voices its concern about the rising perils surrounding the future trajectory of inflation and underlines the significance of the coordination of economic policies to avoid a drift of inflation which could accentuate economic and financial vulnerabilities. To this end, it calls for all stakeholders to back the action of the central bank in its battle against inflation and in the preservation of financial stability.
In view of recent developments, the Council has decided to increase the key rate of the Central Bank of Tunisia from 25 base points to 7.25%, and the rate of deposit and marginal loan facilities at 24 hours at 6.25% And at 8.25% respectively, while staying vigilant to the future evolution of inflation.
In addition, the Board of Directors has decided to raise the rate of savings remuneration (TRE) of 25 base points to 6.25%.
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