Press release of the BCT Executive Board meeting held on 13 June 2018

The Executive Board of the Central Bank of Tunisia held its periodic meeting on 13 June 2018 and examined the different issues scheduled in its agenda. It reviewed the latest data on the economic activity and trend in the main economic, monetary and financial indicators as well as development of transactions on the money market and the foreign exchange market.

The Board considered also the deliberations of the Monetary Policy Committee held on 11 June and examined its recommendations.

In this context, and concerning trend in prices, the Board expressed his ongoing concern about the inflationary pressures as the inflation rate stood at a high level for the second month in a row and the increase in the consumer price index came to 7.7% in annual shift at the end of May of this year. These pressures are likely to be intensified over the forthcoming period given the expected developments of a range of conjunctural proactive indicators, in particular the expected rise in the world prices of raw materials, mainly energy.

In this regard, the Board stressed that persisting inflationary pressures are but a threat to the recent recovery of the economy and the purchasing power as well. This requires appropriate proactive measures to reduce its drawbacks by tuning monetary policy on the basis of the interest rate. The Board discussed also a set of practical proposals aiming to rationalize loans to non-productive activities on the one hand and support intervention of the Central Bank on the money market by developing refinancing mechanisms and directing them more effectively to boost investment and productive sectors on the other hand.

Furthermore, the Board examined a draft circular on inter-bank money market mechanisms aiming to develop transactions and support market competitiveness and deepening.

Following discussion and deliberation of the aforementioned points, the Board decided to raise the Central Bank's key interest rate by 100 basis points, up from 5.75% to 6.75% annually.

The Board also decided to open a new refinancing window for banks within the framework of the call for bids mechanisms into effect, by granting six-month facility to refinancing investment loans in new projects.