Ukraine Monetary Policy


Central Bank holds interest rate at 15-year high

At its 22-23 April Monetary Policy meeting, the National Bank of Ukraine (NBU) decided to leave the discount rate unchanged at 30.0%. As a result, the discount rate remains at the highest level since 2000.

In its accompanying statement, the Central Bank stated that pressures in the foreign exchange market combined with increasing consumer demand, driven by deteriorating expectations, led to a spike in inflation in March. However, the National Bank’s stabilization measures have contributed to strengthening the currency and allowed the Bank to replenish international reserves. The Bank added that a number of factors will influence the path of inflation this year, including scheduled increases in administered prices that will put upward pressure on inflation. However, at the same time, tight monetary and fiscal policy will contribute downward inflationary pressures. Moreover, the Bank stated that, “[f]urther efforts to sustain stability in the foreign exchange market, which will help dispel adverse inflation and depreciation expectations, are crucial for putting inflation on a downward path.” Against this backdrop, the NBU decided to keep the discount rate at a historically high level. Going forward, the Central Bank expects foreign exchange rate pressures to mitigate with the absence of external shocks, allowing the NBU to lower interest rates in the future.

FocusEconomics Consensus Forecast panelists expect an average forecast of 21.05% for the NBU’s discount rate this year. For 2016, panelists expect the discount rate to fall to 14.67%.

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Ukraine Monetary Policy Chart

Ukraine Monetary Policy March 2015 1

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

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