Monetary Environment Review Q2-2025

Monetary conditions eased somewhat in Q2-2025

Interest rates on loans and deposits declined in real terms due to accelerating inflation. On average, rates fell slightly below neutral levels. This contributed to maintaining overheated domestic demand and hindered its quick return to a balanced state. At the same time, the National Bank increasingly relied on directive influence over banks as part of its monetary regulation. This raises the risk of policy missteps and increases the economy’s vulnerability to shocks. The Belarusian ruble in Q2-2025 is assessed to be near its equilibrium level.

In the baseline scenario, monetary conditions are expected to remain non-restrictive for economic activity through the second half of 2025 and into 2026, primarily due to interest rates (Fig. 1). However, the predictability of the National Bank's actions has declined, and monetary policy is becoming more discretionary and exhibiting voluntarist tendencies. For economic outcomes in 2026, unpredictable monetary policy represents a significant source of uncertainty.

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