The main scenario of the regulator’s forecast assumes the continuation of the discount rate reduction cycle only at the beginning of 2025.
The National Bank of Ukraine (NBU) still left the discount rate at 13% per annum. This was reported on the regulator’s website on Thursday, July 25.
“Considering the need to ensure the stability of the foreign exchange market and bring inflation closer to the target of 5% in the forecast horizon, the NBU board decided to keep the discount rate at 13%,” the statement said .
It was noted that despite the gradual decrease in rates on hryvnia deposits and government bonds, their profitability provides protection for the population’s hryvnia savings from inflation. The rates on these instruments exceeded the inflation rate predicted by the NBU and the level of household inflation expectations.
“At the same time, in June, growth in the amount of fixed-term hryvnia deposits of the population stopped. Considering that further acceleration of inflation may lead to worsening expectations and a decrease in the real profitability of those hryvnia instrument, it is advisable to maintain the discount rate at 13%,” added the press service.
At the same time, the main scenario of the regulator’s forecast provides for the continuation of the cycle of lowering the discount rate only at the beginning of 2025.
“However, the NBU responds flexibly to changes in the balance of risks for inflation and the foreign exchange market If the risks for the development of inflation and the foreign exchange market weaken, in particular, as As a result of Ukraine possibly receiving a large amount of financial support, the NBU will consider the possibility of a faster restoration of the rate reduction cycle “, the regulator said.
At the same time, in the event of a significant increase in price pressure and the emergence of risks of unbalanced expectations, the NBU will be ready to strengthen monetary policy.
As you know, in June 2022, the NBU raised the discount rate from 10% to 25%. This level remained until July 2023, when the regulator reduced the rate to 22%. In September, the NBU reduced the rate to 20%, in October – to 16%, and in December – to 15%. In January, the discount rate did not change; in March it was reduced to 14.5%, in April – to 13.5%, and in June – to 13%.
Source: korrespondent
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