The regulator decided to continue the discount rate reduction cycle, which began in July.
The National Bank of Ukraine decided to reduce the discount rate from 16% to 15% from December 15. This was reported on the regulator’s website on Thursday, December 14.
“This decision is consistent with slowing inflation and improving inflation expectations, which will help maintain the attractiveness of hryvnia instruments for savings. Inflation fell to 5.1% in November, even slightly faster than expected,” the report said.
The National Bank noted that the slowdown in inflation was facilitated by both the expansion of the supply of food products from the new harvest and improved expectations against the backdrop of a stronger exchange rate of the Hryvnia.
According to the regulator, inflation rates in December will remain close to current levels. At the same time, there are lingering risks of accelerating inflation due to logistical difficulties at the western borders and the rapid depletion effects of significant harvests, especially vegetables.
The main risk for the dynamics of inflation and economic development remains the course of a large-scale war, while at the same time the NBU points to higher risks in terms of international aid.
“As before, the NBU assumes that a noticeable reduction in security risks will occur no earlier than 2025. In the event of a longer period of active hostilities, additional economic losses and more significant inflationary pressure is expected. The risks of the rhythm of The flow of external financial assistance has been partially realized. At the same time, the NBU expects to restore the rhythm of external financing in the near future,” the report notes.
As you know, in June 2022, the National Bank raised the discount rate from 10 to 25%. This level remained until July 2023, when the NBU lowered the rate to 22%. In September, the NBU reduced the rate to 20%, and in October – to 16%.
The discount rate is equal to the economic value of money. At this rate, the NBU provides funds to commercial banks, and they lend to individuals and legal entities. Consequently, the discount rate affects the value of credit resources. An increase in the discount rate indicates an increase in the level of inflation and a decrease in the rate of economic growth in the country.
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Source: korrespondent
I’m Liza Grey, an experienced news writer and author at the Buna Times. I specialize in writing about economic issues, with a focus on uncovering stories that have a positive impact on society. With over seven years of experience in the news industry, I am highly knowledgeable about current events and the ways in which they affect our daily lives.