Tunisia’s Central Bank Hikes Interest Rate to Curb Inflation

Tunisia’s Central Bank Hikes Interest Rate to Curb Inflation

Wednesday, 7 March, 2018 - 11:45
A man walk out of the Central Bank in Tunis, Tunisia. (Reuters)
Tunis - al-Munji Saidani
Tunisia’s Central Bank raised its key interest rate to 5.75 percent from 5.0 percent to tackle inflation that has been mounting for months.

Tunisia’s annual inflation rate rose to 7.1 percent in February from 6.9 percent in January. Inflation reached 4.6 percent in February 2017 and 5.3 percent on average in 2017.

In this regard, economic and financial expert Saad Bou Makhlah said that the rise of the inflation rate led to the mounting interest in the monetary market to 5.61 percent last February.

This urges an adjustment in the interest rate, he recommended.

Central Bank Governor Marwan El-Abbasi warned that inflation may reach 10 percent if urgent procedures were not taken to confront it.

Inflation hit its highest level in Tunisia in 20 years, reaching 6.9 percent in January, compared to 6.4 percent in December 2017. This came after a relapse of the domestic currency against foreign currencies and the increase of import pressures on balances.

The trade balance deficit in Tunisia reached a record rate of TND15.5 billion (USD6.2 billion) at the end of 2017.

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