The regulator made this decision in response to inflation rising to 11.2% in November.
The National Bank of Ukraine raised the discount rate to 13.5% per annum. This was reported on the regulator’s website on Thursday, December 12.
“In order to maintain the stability of the foreign exchange market, avoid the imbalance of expectations and gradually bring inflation to the target, the NBU board decided to increase the discount rate by 0.5 percentage points – to 13.5%,” the statement said .
The central bank sees the need to strengthen interest rate policy “to reverse the inflation trend and bring inflation to the 5% target over the policy horizon.”
The NBU expects that the increase in the discount rate will help maintain control over inflation expectations and support the real yield of hryvnia instruments.
The National Bank recalled that in November inflation accelerated to 11.2% in annual terms. On the one hand, the consequences of limited food supplies due to this year’s worst harvest remain a significant driver of price increases. It is expected that the impact of this factor on inflation should be leveled out next year, with the arrival of the new harvest.
“On the other hand, the inflationary surge is getting more basic signs, which are confirmed by the further acceleration of core inflation (to 9.3% y/y in November). , including electricity and labor payments, as well as well as the effects on the exchange rate due to the weakening of the Hryvnia in recent times, inflation expectations currently show relative stability, but the risk of their imbalance is increasing against the backdrop of increased public attention in the processes of inflation.” – stated in the NBU.
The regulator promised to continue to strengthen the interest rate policy while maintaining signs of continued inflationary pressure and the threat of an imbalance in inflation expectations.
We remind you that on October 31, the NBU kept the discount rate at 13% for the third time in a row and announced its intentions to keep it at this level until the summer of 2025.
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
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