Tunisia - The Executive Board of the Central Bank of Tunisia (BCT) decided at its meeting on Thursday to keep its key interest rate unchanged at 8% and to continue to pursue a prudent monetary policy.

A press release published after the board meeting indicated that this decision was taken in view of the risks associated with the path of inflation.

According to the same source, the board reviewed recent economic and financial developments at both the international and domestic levels.

On the domestic front, economic growth at constant 2015 prices remained on a gradual upward path, reaching 1.8% (year-on-year) in the third quarter of 2024, compared with 1% in the previous quarter and -0.4% a year earlier.

In view of the expected performance for 2024 as a whole, the Board emphasises the need for all stakeholders to work towards accelerating the implementation of the necessary reforms and overcoming any difficulties in order to strengthen supply capacities and achieve growth rates that preserve overall balances.

In the external sector, the current account deficit continued to narrow to TND 3,131 million or 1.9% of GDP at end-October 2024, compared to TND 3,836 million or 2.5% a year earlier, despite a trade deficit still burdened by a high energy bill. This improvement is mainly due to the good performance of the tourism sector and labour income.

On November 26, foreign exchange reserves stood at TND 24,805 million, equivalent to 112 days of imports, close to the level recorded at the same time last year.

On another front, following a gradual downward trend, inflation stabilised at 6.7% in October 2024, for the third consecutive month. This was mainly due to the rise in fresh food inflation, which reached 13% in the same month.

On the other hand, core inflation 'excluding fresh food and products at administered prices' continued to fall, to 6.4% in October 2024, compared with 6.7% in the previous month and 8.9% a year earlier.

Internationally, inflation has continued to ease gradually and almost across the board in recent months.

On the other hand, the process of returning inflation to central banks' objectives on a sustainable basis continues to be hampered by the persistence of core inflation, a measure of the underlying trend in consumer prices, at relatively high levels and by the unwinding of favourable base effects associated with earlier declines in energy prices.

In particular, the resilience of global demand and the gradual, almost universal rise in international commodity prices are likely to weigh on the path of inflation in the period ahead.

Monetary policy easing, which has recently begun in the major economies, will continue to be gradual and conditional on inflation converging towards the target on a sustainable basis.

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