Monetary Environment Review. Q1-2023

In Q1-2023, monetary conditions kept stimulating economic activity and were pro-inflationary. Interest rates on Belarusian ruble loans and deposits rewrote their historical lows again in the context of the National Bank's implementation of its extra-soft monetary policy. The expansionary monetary policy resulted in a rapid growth in the money supply, associated with a “dangerous” change in its structure: cash and current account funds reached a record share in the Belarusian ruble money supply in 20 years. The Belarusian ruble remained undervalued in Q1-2023; however, the exchange rate support provided to Belarusian producers weakened compared to last year. Monetary conditions will remain soft for the remainder of 2023 if there are no significant shocks.