If assumptions underlying the MNBʼs projections hold, maintaining the current level of the base rate and loose monetary conditions achieved through the change in monetary policy instruments for an extended period is consistent with the medium-term achievement of the inflation target and a corresponding degree of support to the economy, the Council said in the minutes, echoing statements it has made since signalling an end to an easing cycle at a policy meeting a little more than a year ago.
If inflation remains persistently below the target, the Council would stand ready to ease monetary conditions further using unconventional, targeted instruments, the rate-setters added.
The Council earlier placed limits on the central bankʼs main instrument for sterilizing liquidity and introduced FX swaps as part of its “unconventional” monetary policy toolbox.
The Council noted that a “watchful approach” to monetary policy is still justified because of uncertainty in the global financial environment.
The decision to keep the base rate on hold at the policy meeting on May 23 was unanimous.
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