Tunisia Holds Rates With Reforms Needed for IMF Bailout in Limbo

Tunisia’s central bank kept its benchmark interest rate unchanged despite a pick-up in inflation, as political tensions hinder reform efforts needed to obtain a loan from the International Monetary Fund, Bloomberg News reported. Banque Central de Tunisie kept the rate at 8%, the regulator said in a statement following a board meeting Thursday. The “current stance of the monetary policy will support a further easing of inflation over the coming period,” it said. Still, it added that the risks of a further acceleration “are significantly tilted to the upside.” The year-on-year inflation rate sped up in August to 9.3%, breaking a downward cycle that lasted for much of the year. The central bank has kept rates unchanged since December, when it raised them by 75 basis points. It said it was ready to act should inflationary risks worsen. Tunisians are suffering from chronic shortages of food staples after the cash-strapped state tried to curb imports. Many form early morning queues for bread, while a drought this year has hit the local wheat harvest. The scarcities also apply to sugar, coffee and milk, and recently extended to soft drinks as the country runs short of carbonic gas. Read more.