Interest Rate in Ukraine
Ukraine - Interest Rate
NBU cuts the key policy rate by 50 basis points in July
At its 18 July meeting, the National Bank of Ukraine (NBU) decided to chop the key policy rate to 17.00%, from 17.50%. The decision was in line with market expectations and marked the second cut so far this year. Overall, monetary policy still remains tight after the NBU had to ratchet up the policy rate in 2015 after the political crisis caused the hryvnia to sharply depreciated.
Moderating price pressures drove the Bank’s decision as inflation dropped to 9.0% in June, justifying the slightly looser monetary stance. A stable exchange rate and lower inflation expectations have helped rein in price pressures. In the accompanying statement, the NBU kept its inflation forecast unchanged and reiterated that it sees inflation falling to 6.3% by the end of 2019 and returning to the medium-term target of 5.0% by end of 2020. Regarding the economy, the Bank revised up its growth forecast for this year to 3.0% (previous: +2.5%) and next year to 3.2% (previous: +2.9%), citing stronger-than-expected domestic demand, improved terms of trade and an ample grain harvest.
Looking ahead, the NBU signaled it will continue with a gradual easing cycle as long as inflation continues to fall. Notably, the Bank published for the first time a forecast for the key policy rate to improve transparency of monetary policy and boost its effectiveness. The NBU stated that it “envisages the key policy rate to decrease further, to 8% over the coming years”. Regarding risks, the Bank cited several downside risks, as well as a couple of upside risks. A delay in reforms is the principal threat, as it could hurt the IMF’s cooperation with the country and spark financial volatility.
The next monetary policy meeting is scheduled for 5 September.
FocusEconomics panelists expect monetary policy easing to continue this year and see the key rate ending 2019 at 15.89% and 2020 at 12.72%.
Ukraine - Interest Rate Data
|Policy Interest Rate (%)||6.50||14.00||22.00||14.00||14.50|
5 years of economic forecasts for more than 30 economic indicators.
Ukraine Interest Rate Chart
Source: National Bank of Ukraine.
|Bond Yield||19.00||0.0 %||Jul 27|
|Exchange Rate||25.12||0.30 %||Jul 31|
|Stock Market||541||0.21 %||Jul 31|
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July 26, 2019
New President Volodymyr Zelensky’s Servant of the People party came away with a resounding victory in the 21 July snap elections, winning 43% of the vote and 254 out of 424 seats in the Rada.
July 19, 2019
Industrial production contracted 2.3% over the same month last year in June, which contrasted May’s 1.6% expansion and marked a four-month low.
July 18, 2019
At its 18 July meeting, the National Bank of Ukraine (NBU) decided to chop the key policy rate to 17.00%, from 17.50%.
July 11, 2019
Consumer prices fell 0.5% month-on-month in June, contrasting May’s 0.7% rise.
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