Ukraine: Central Bank reduces key policy rate
April 14, 2017
The National Bank of Ukraine (NBU) decided to cut the key policy rate from 14.00% to 13.00% at its 13 April monetary policy meeting. The decision marked a return to the easing cycle after the Bank had kept the rate unchanged for the past six months.
The move was largely due to better than expected inflation data out of the battered economy. While price pressures have risen, the increase has been weaker than anticipated, in part due to anemic economic activity. In addition, favorable developments in the exchange rate market have limited inflationary pressures, as higher commodity prices are supporting an appreciation of the hryvnia. Consequently, the NBU stated that inflation should meet its target of 8% plus/minus 2.0 percentage points in 2017.
The Bank pointed to a continuation of its easing cycle in the coming months, as inflationary pressures subside. Moreover, the economic blockade has disrupted activity and lower interest rates should help buttress growth, which is expected to slow this year. The next policy meeting is scheduled for 25 May 2017.