The recommendation is temporary in nature; in these very unusual times, it is necessary to maintain a sufficient degree of capitalization of profits. Banks’ profitability has indeed been significantly affected by the pandemic.
The BOU has modernised its monetary policy, introducing an Inflation Targeting Lite monetary policy framework, which employs a policy interest rate – the Central Bank Rate (CBR) – to influence demand in the economy. The new framework has already proved to be effective in bringing inflation down.