Said decision will help return inflation to the target of 5% in the coming years and maintain the stability of the foreign exchange market, according to the National Bank.
The National Bank of Ukraine (NBU) left the discount rate unchanged at 13% per annum for the second time in a row. This was reported on the regulator’s website on Thursday, September 19.
“This decision will contribute to the gradual return of inflation to the target of 5% in the coming years and will support the stability of the foreign exchange market,” the statement said.
The National Bank recalled that inflation has accelerated in recent months and reached 7.5% in annual terms at the end of August. At the same time, this trend will continue in the coming months due to expanding demand as a result of budget expenditures, increased business costs for labor and electricity, and increased excise taxes.
At the same time, Russia’s aggression is causing great pressure on public finances, and the course of a large-scale war remains a major risk for the dynamics of inflation and economic development, the regulator points out.
As such, the speed with which inflation returns to the 5% target and the sustainability of Ukraine’s economic growth depends largely on the nature and duration of the war. The National Bank recalled that Russia’s aggression continues to pose the following risks:
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the emergence of additional budgetary needs, primarily to maintain defense capability;
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possible additional tax increases, which, depending on parameters, may increase price pressure;
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further damage to infrastructure, primarily energy and port infrastructure, which will limit economic activity and put pressure on supply-side prices;
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deepening negative migration trends and further widening labor shortages in the domestic labor market.
At the same time, uncertainty remains about the future amount of support for Ukraine by international partners, including due to the focus of many countries on domestic election cycles and the disruptive activities of the Russian Federation.
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 last year, 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%.
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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.