The Executive Board of the Central Bank of Tunisia (BCT) decided at its periodic meeting Thursday to maintain the Bank’s key interest rate unchanged at 6.25%.
The Board particularly noted the continued increase in the consumer price index, year-on-year, to 6.4% in November 2021 compared to 6.3% in the previous month and 4.9% in the same month of the past year.
This is attributable to the acceleration in manufacturing and service prices (7.6% and 4.9% respectively compared to 7.5% and 4.6%) despite the relative slowdown in food inflation (6.9% compared to 7.0% last October).
The main indicators of core inflation, including inflation “excluding administered and fresh products” and the one “&excluding food and energy” recorded an increase in their rate of growth to 6.0% and 6.5% respectively in November 2021 from 5.7% and 6.3%, a month earlier.
The Board stressed that the situation requires continued close monitoring of sources of inflation and more coordination between economic policies, in addition to implementing appropriate mechanisms to limit the risks.
The Board noted the relative stability of the level of net foreign exchange reserves, which reached 23.3 billion dinars or 136 days of imports at December 29, 2021 from 23.1 billion dinars and 162 days of imports at the end of 2020.
At the end of its work, the Board reaffirmed its intention to closely monitor all economic, monetary and financial developments and that it would not fail to use the mechanisms at its disposal to support the restoration of economic activity, while containing inflationary pressures.
It also stressed the need to accelerate the implementation of a clear plan of economic reforms, able to restore the confidence of international donors and investors in the Tunisian economy, involving all relevant national partners so as to ensure commitment to the process of structural reforms and restore macroeconomic and financial balances, including public finances that are under severe pressure.
The Board urged continued coordination between financial and monetary policies to avoid monetary financing of the budget deficit, given its impact on inflation.
It also emphasized the need to continue coordinating with the Government to reach an agreement with the International Monetary Fund on a new program, which will send positive signals to investors and will give an impetus to improve the country’s sovereign rating.
