(MENAFN- Gulf Times) Tunisia's central bank has kept its key interest rate unchanged, extending a pause that's been in place since a hike in February pushed borrowing costs above inflation.
Policy makers left the benchmark at 7.75% on Friday. Governor Marouane El Abassi has said rates may not need to rise again this year following the increase of 100 basis points, the central bank's first since June 2018.
The threat of double-digit inflation is receding thanks to a moderation in food costs. Price growth is now pulling back from near a quarter-century high, helping to ease alarm about Tunisia's prospects and the perilous state of its finances.
The dinar has stabilised since the rate hike, when El Abassi also called for additional efforts to curb inflation. In April, consumer prices rose an annual 6.9%, the smallest increase in over a year. The bank's directors noted the easing inflation in April, led by lower food prices, and an improved external balance, although growth slowed considerably in the first quarter from the year-earlier period.
'These developments partially reflect the contribution of the central bank's monetary policy since last year and aimed at mitigating internal and external imbalances, they said.
The country that gave rise to the Arab Spring uprisings in 2011 is getting some respite from inflation as its economy struggles to take off. Political infighting and a dearth of foreign investment have stymied efforts to revive growth.
The International Monetary Fund, which in 2016 approved a $2.9bn loan to Tunisia, has urged authorities to press ahead with cost-cutting measures steps that have put successive governments on a collision course with powerful unions.
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