The National Bank announced on January 25 that it would not change the discount rate. The regulator left it unchanged at 15%.
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The regulator explained that the decision takes into account the need to maintain exchange rate stability, maintain moderate inflation in 2024 and bring it to the target range of 5% ± 1% “on the monetary policy horizon.”
The National Bank assumed that in the coming months inflation will be within the target range, and will accelerate slightly from the middle of the year due to the exhaustion of the effects of last year’s high harvests and the transfer of business costs to consumer prices. Additionally, further recovery in consumer demand will put pressure on prices.
Inflation is expected to be 8.6% at the end of 2024, return to the target range at 5.8% in 2025, and rise to 5% in 2026.
Maintaining the discount rate at 15% will further ensure the attractiveness of hryvnia instruments so that their profitability will continue to exceed current and expected inflation. Citizens will be able to protect their savings from inflationary depreciation, the NBU said in a statement.
The regulator also suggested that international financial support for Ukraine will continue, albeit in smaller volumes. This will keep international reserves at a high level and ensure exchange rate stability.
It is expected that in 2024 Ukraine will receive about $37 billion. USA through external loans and grants.
The base scenario of the updated NBU forecast, which assumes the receipt of a sufficient volume of international financing and the reduction of security risks from next year, provides for a slight reduction in the discount rate from the second half of 2024. At the same time, the NBU promised to adapt monetary policy if the balance of risks for inflation and exchange rate stability changes.
Source: Racurs
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