TUNIS: "The decision by the Central Bank of Tunisia's Board of Directors, at its meeting on March 26, 2025, to cut the BCT's key rate by 50 basis points from 8% to 7.5% is part of a gradual adjustment policy, enabling it to keep prices under control at all times, while ensuring the best possible conditions for the smooth functioning of the economy,' economic and financial analyst Bassem Ennaifar said on Friday in an interview with TAP.

‘The BCT has found a middle ground between achieving results and making progress in curbing inflation, on the one hand, and protecting our national economy from inflationary risks, which may result from price trends on the international market, or from the rise in local demand, encouraged by wage increases, on the other,’ he remarked.

Likewise, the central bank has found itself obliged to stimulate economic growth by, among other things, facilitating access to financing, above all by reducing its key rate, especially as inflation has been on a downward curve for months now.

The BCT's key rate has been revised upwards to 8% since December 2022, in order to cope with double-digit inflation, caused notably by the increase in international commodity prices, due mainly to the Russian-Ukranian conflict.

‘Today we are in a period of relatively controlled inflation, although it is still high at 5.7%, but it has fallen sharply from the peak recorded in 2022, and so it is legitimate for economic operators to ask for a cut in the key rate in order to access financing,’ he considered.

//The cut in the key rate will help keep a close eye on price trends//

‘The BCT is aware that cutting the key rate by 50 basis points will not revolutionise demand for financing or boost investment, but it will enable it to monitor price trends closely. Indeed, if prices confirm their downward trend, the BCT will be able to lower its key rate further a few months later. On the other hand, if prices rise again, it will intervene by adopting even stricter monetary policies and will not rule out the possibility of raising the key rate,’ he added.

The economic analyst further specified that the 50 basis point reduction in the key rate will not encourage a radical change in investment intentions, but will rather reduce the cost of short-term credit, so as to make it easier to finance operations.

As far as households are concerned, this slight cut in the key rate will not have any major immediate impact on consumer credit. On the other hand, it could stimulate financing for home purchases. Banks in this regard, could focus on granting variable-rate loans in order to maintain their profit levels.

For the record, the new article 412 of the Law of August 2, 2024 (Commercial Code) stipulates that anyone who has obtained a loan with a term of more than 7 years at a fixed rate, and who has repaid it for 3 years, can benefit from a reduction in the interest rate on the outstanding capital.

The State, the main beneficiary of the reduction in the BCT's key rate.

Furthermore, Ennaifer considered that ‘the State, as the leading issuer on the primary debt market in Tunisia, is the economic agent that will most benefit from this reduction in the key rate, as it is in the process of issuing treasury bills and plans to launch a national loan."

The State has not yet issued any tranches of the 2025 national bond, whose total amount had been set at TND 4.8 billion in the 2025 Finance Law, ‘because the State did not want to engage in bond issues with high and costly interest rates, as was the case for the national loans for 2024 and 2023," he underlined.

In the same vein, the economist pointed out that the government had launched a major short-term treasury bond issue in February 2025, worth TND 1.2 billion (the equivalent of a tranche of the national bond), even though it had no major financing needs for the country, with the aim of mobilising short-term financing at a much lower cost than issuing a tranche of the national bond.

//Lowering the rate of interest on savings to stimulate investment//

Referring to the decisions taken by the BCT's Board of Directors on Thursday, Ennaifer mentioned the reduction in the minimum rate of return on savings by 50 basis points, from 7% to 6.5%, underlining that ‘any change in the key rate, whether upwards or downwards, is generally matched by a similar change in the minimum rate of return on savings."

The aim of lowering this rate, he considered, is to encourage economic operators to invest their savings, in order to boost economic growth.

‘Today, we have a significant pool of savings worth TND 34.3 billion, for bank savings, and TND 10.5 billion, for postal savings, according to the latest statistics published by the BCT (for January 2025),’ the economist specified, adding that these savings generate revenue for the State in the form of deductions at source of some TND 694 million, and interest (investment income) for the benefit of Tunisians of over TND 2.5 billion, according to estimates in the 2025 Finance Law.

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