Ukraine Monetary Policy March 2017


Ukraine: Central Bank holds key policy rate

March 3, 2017

The National Bank of Ukraine (NBU) decided to hold the key policy rate unchanged at 14.00% at its 2 March monetary policy meeting. The decision marked the second consecutive decision not to make any changes to the rate after a sequence of six rate cuts.

The decision to keep the easing cycle on hold was due to a rise in inflationary pressures, which are threatening the Bank’s target of 8.0% plus/minus 2.0 percentage points by the end of 2017. Inflation is expected to be elevated in the coming months, chiefly due to base effects, and risks to the inflation outlook are high. A transport blockade by rebel groups is threatening to disrupt economic activity and could put downward pressure on the country’s exchange rate. The next policy meeting is scheduled for 13 April 2017.

FocusEconomics Consensus Forecast panelists expect the NBU’s key policy rate to end the year at 11.07%. For 2018, panelists expect the key policy rate to fall to 9.55%.

Author: Angela Bouzanis, Senior Economist

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