Tunisia Central Bank Maintains Rate as Inflationary Pressures Persist

by Central Bank News
August 30, 2018 4:26 PM

Tunisia's central bank left its key interest rate steady at 6.75 percent, noting the persistence of inflationary pressures despite a slight decline in July and underscoring the need to closely monitor financial and monetary data.

The Central Bank of Tunisia (BCT), which has raised its rate twice this year by a total of 175 basis points, also noted a continued widening of the trade deficit as higher energy imports outpaced the increase in tourism receipts and revenue from workers abroad.

The central bank's board stressed the need for further coordination with affected parties to help counteract these developments that are having a negative impact on the exchange rate of the dinar.

Tunisia's inflation rate has been rising steadily since October last year though it eased in July to 7.5 percent from 7.8 percent in June, when the BCT raised its rate by 100 basis points.

In its statement following the board meeting on Aug. 29, the central bank repeated its warning from June that persistent inflation would have a negative effect on the country's economic growth.

Tunisia's economy grew by an annual 2.8 percent in the second quarter of this year, up from 2.5 percent in the first quarter for first half growth of around. 2.6 percent, up from 1.9 percent a year earlier.

Tunisia's dinar has depreciated against both the euro and U.S. dollar this year although it has bounced back against the dollar in the last two weeks as the greenback has retreated.

The dinar was trading at 2.76 to the dollar today, down almost 11 percent this year.