The Central Bank is expected to maintain its current policy rate at its upcoming meeting, following its decision in January to keep the Overnight Policy Rate (OPR) unchanged at 8.00%.
In January, the bank cited limited price pressures, deepening deflationary trends, and a strong economic recovery as reasons for its decision. The statutory reserve ratio (SRR) for banks also remained at 2.00%.
First Capital Research predicts an 80% chance that the Central Bank will keep rates unchanged, citing slow reserve accumulation due to debt payments, rising imports, and potential declines in remittances and tourism earnings.
Additionally, robust government spending, increased social benefits, and strong private sector credit growth indicate that further rate cuts may not be necessary to stimulate the economy.
However, First Capital noted that ample liquidity in the domestic money market and a widening yield curve could justify a rate cut to boost credit demand and GDP growth. It also suggested that if global central banks lower rates later in 2025, opportunities may emerge for foreign investment in government securities.
