Ukraine Monetary Policy July 2016


Central Bank continues easing cycle in July

Stabilizing inflationary pressures in Ukraine’s tattered economy allowed the National Bank of Ukraine (NBU) to decide to cut the key policy rate from 16.50% to 15.50% at its 28 July monetary policy meeting. The decision marked the Bank’s fourth consecutive cut.

In its accompanying statement, the Central Bank outlined that the decision came against a backdrop of easing price pressures thanks to weak domestic demand, an appreciation in the exchange rate, as well as a large supply of food products. The Bank added that it continues to buy foreign currency to replenish international reserves, but at a level that does not interfere with a gradual appreciation in the hryvnia. Looking forward, the Bank maintained its GDP and inflation forecasts unchanged and sees inflation rising to 12% by the end of the year due to increased tariffs for public utilities. The NBU stated that it will continue with monetary policy easing to support the economic recovery as long as further rate cuts do not interfere with reaching the Bank’s inflation target. The next monetary policy meeting is scheduled for 15 September.

FocusEconomics Consensus Forecast panelists expect the NBU’s key policy rate to end the year at an average forecast of 14.29%. For 2017, panelists expect the key policy rate to fall to 10.54%.

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Ukraine Monetary Policy Chart

Ukraine Monetary Policy July 2016 0

Note: NBU key policy rate in %.
Source: National Bank of Ukraine (NBU).

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