Central bank keeps rates on hold

In a statement released after the meeting, the Council repeated its earlier policy stand.

“The monetary conditions established at the short end support price stability, the preservation of financial stability and the recovery of economic growth in a sustainable manner,” the policy makers said.

The Council also reiterated that it is “key” to keep short-term yields at a “safe distance from a range close to zero” as well as their commitment to “maintaining price stability during the coronavirus pandemic”.

The Council said it closely monitors “the persistence of inflationary effects” resulting from the economic recovery as well as “possible inflationary effects of financial market developments”.

“If warranted by a change in the outlook for inflation, the [NBH] will be ready to use the appropriate instruments,” the Council added.

The Council said the NBH will continue to set the rate for its one-week deposit facility at weekly tenders “in response to the increase in risk aversion vis-a-vis emerging markets”, which it deems “the greatest risk in terms of the outlook for inflation”.

“The Bank will maintain the difference between the base rate and the one-week deposit rate as long as warranted by inflationary risks,” they added.

The one-week deposit rate has stood at 0.75 percent, 15 basis points over the base rate, since shortly after a monthly policy meeting in September.