The standing deposit facility rate was cut to 8.25 per cent and the standing lending facility rate to 9.25 per cent, it said in a statement.

The decision was taken "in the absence of significant inflationary pressure" and the bank expects inflation to remain below its 5-per cent target in the medium term.

Headline inflation was 1.7 per cent in June this year and is projected to remain below the inflation target in the near term.

Meanwhile, core inflation was 4.4 per cent year on year in June compared to 3.5 per cent in May, although a sustained acceleration is not anticipated, the statement said.

The country’s economy expanded for the third consecutive quarter in the first quarter (Q1) this year, with a YoY growth of 5.3 per cent, as per the estimates of the department of census and statistics.

The latest economic indicators suggest that real gross domestic product (GDP) growth in Q2 2024 also has been robust.

The rebound in domestic economic activity is expected to sustain, buoyed by the transmission of relaxed monetary policy to broader market interest rates, enhanced supply conditions, the gradual rebound in external demand conditions, revival of tourism and the dissipation of uncertainties surrounding debt restructuring, the central bank said.

The economy, which operates below its full capacity presently, is forecast to reach its potential over the medium term horizon, it noted.

While the external current account is likely to have recorded a surplus in Q1 2024, the cumulative merchandise trade deficit widened YoY during this period.

Fibre2Fashion News Desk (DS)