The Central Bank is scheduled to convene on June 6 to decide on the future of the key interest rate, with analysts predicting either a continuation of the current 21% rate or a slight reduction. Experts cite a combination of factors influencing the decision, including inflation trends, economic stimulus from military spending, and the need to maintain public confidence in savings.

Economists are divided on the optimal course of action. Some suggest a modest rate cut to 20% as a compromise, acknowledging that while inflation has dipped below the Central Bank’s target, pro-inflationary risks such as a tight labor market and rising tariffs persist. The current real rate, the key rate minus inflation, remains significantly higher than in previous months, justifying some easing.

Others argue for maintaining the 21% rate, emphasizing the importance of curbing inflation and safeguarding savings. High military expenditures are stimulating the economy, but the Central Bank must ensure this stimulus doesn’t become excessive and lead to demotivation. Keeping the rate high signals a commitment to economic stability and protects savings from devaluation, which has been a concern for citizens in the past.

One financial expert believes the Central Bank faces a difficult choice, as any decision could lead to negative consequences. Maintaining the high rate burdens businesses with high borrowing costs, while lowering it could exacerbate inflation, especially with upcoming increases in housing and utility tariffs. The expert suggests the Central Bank might maintain the rate but soften its rhetoric.