The Monetary Council also decided on Tuesday to raise the O/N deposit rate by 100 basis points to 11.25% and the O/N and one-week collateralised loan rates by 100 basis points to 14.25%. The O/N deposit rate and the collateralised loan rate mark the bottom and the top, respectively, of the central bank’s “interest rate corridor”. The decision was in line with expectations.
“The further rise in inflation and persistent inflation risks warrant the decisive continuation of the tightening cycle,” the Council reiterated in a statement released after the meeting. “Maintaining tighter monetary conditions for a longer period is warranted to manage increasing second-round inflation risks resulting from persistently negative supply effects,” they added.
The Council reiterated that the tightening cycle will continue “until the outlook for inflation stabilises around the central bank target in a sustainable manner and inflation risks become evenly balanced on the horizon of monetary policy”.