Ukraine: Central Bank pauses easing cycle
December 8, 2016
The National Bank of Ukraine (NBU) decided to hold the key policy rate unchanged at 14.00% at its 8 December monetary policy meeting, ending a sequence of six consecutive rate cuts.
The decision to pause the easing cycle was due to an uptick in price pressures in October. Subsidy cuts and base effects fueled a rise in inflation and these effects are likely to linger in the coming months. Accordingly, the NBU sees inflation ending 2016 at its target of 12%, before falling to around 8% in 2017 and 6% in 2018. The Bank’s decision was also influenced by a rise in upside risks to inflation give the high chance of delays in the disbursement of bailout funds and an upcoming hike in minimum wages in 2017. The next policy meeting is scheduled for 26 January 2017.