Ukraine Monetary Policy January 2017


Ukraine: Central Bank holds key policy rate unchanged

January 26, 2017

The National Bank of Ukraine (NBU) decided to hold the key policy rate unchanged at 14.00% at its 26 January monetary policy meeting. The decision followed December’s pause in the easing cycle, after a sequence of six consecutive rate cuts in 2016.

The Central Bank revised upward its inflation forecasts for this year, which drove the decision to hold the key policy rate. The Bank now sees inflation ending 2017 at 9.1% (previously forecast: 8.0%), chiefly due to a hike in the minimum wage, foreign exchange rate volatility and a statistical base effect. The NBU also revised its growth forecasts and now sees GDP growth picking up to 2.8% in 2017 and 3.0% in 2018 (previously forecast: 2.5% in 2017; 3.5% in 2018). The Bank commented that higher wages and rising exports should fuel quicker growth this year than previously expected, however, downside risks from geopolitical turbulences and fiscal slippage linger. The next policy is scheduled for 2 March 2017.

FocusEconomics Consensus Forecast panelists expect the NBU’s key policy rate to end this year at 10.79%. For 2018, panelists expect the key policy rate to fall to 9.40%.

Author: Angela Bouzanis, Senior Economist

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Ukraine Monetary Policy Chart

Ukraine Monetary Policy January 2017

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

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