For July 2016, the Central Bank recorded sales of foreign exchange the equivalent of $1.3 billion, even as the average citizen struggled to obtain foreign exchange at local banks.
Food inflation slowed to 9.4 per cent in June 2016, down from 9.6 per cent in May.
There were slower price increases in the meat and vegetable sub-indices, while the milk, cheese and eggs sub-index declined.
There also seemed to be continued sluggish distribution activity, as the Central Bank recorded a dip in retail sales.
Output in the energy sector declined in the first half of 2016 on a year-on-year basis. Production of natural gas and crude petroleum fell by 11.6 per cent and 9.5 per cent respectively in January-May 2016 compared to the similar period in 2015.
Government operations resulted in a net domestic fiscal withdrawal of $790.7 million, even as the Central bank reports a reduced pace of execution of public sector projects, which has resulted in slowed construction, evidenced by lower cement sales and production of mined aggregates such as sand and gravel.
Although the financial sector did demonstrate some buoyancy, since the last Monetary Policy Announcement at the end of May, financial system liquidity has declined.
Over the period July 1 – 25, 2016 commercial banks’ excess reserves fell to a daily average of $3.9 billion compared with $6.4 billion in May and $5.6 billion in June.
Against the backdrop of muted domestic economic activity, low inflation and an uncertain global economic outlook, the Central Bank’s Monetary Policy Committee decided at its July 2016 meeting, to maintain the “Repo” rate at 4.75 per cent.
Repo rate is the rate at which the central bank of a country lends money to commercial banks in the event that the banks experience a shortfall of funds, for example if they have more money out on loan, or paid out in withdrawals, than they receive in deposits.
The Repo rate is used by monetary authorities to control inflation in economies.