The NBU kept the key rate at 13%, while saying that it will support the hryvnia from depreciation and maintain exchange rate stability
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This was stated in the official statement of the regulator on July 25.
The cycle of reducing the key rate according to the baseline scenario will begin at the beginning of 2025. In 2024, the NBU has already reduced the rate by 0.5% three times – in March, April and June. Since June 14, it has been 13%.
Since last year, it has been reduced six times already, after it was sharply increased from 10% to 25% in the first year of the war. As a result, the rate is actively approaching pre-war levels.
The discount rate is a benchmark for the cost of loans and deposits for commercial banks. In general, it is considered that the lower the rate, the cheaper the loans. In case of an increase, the opposite is true.
On July 25, in its explanation and commentary on the current situation in the financial sector and on the currency market, the National Bank reported that after a long period of decline, inflation resumed growth in May and accelerated to 4.8% in June.
Price pressure will persist in the coming months due to further increases in business costs, higher excise taxes, as well as the exhaustion of the effects of last year’s significant harvests and the negative impact of the summer drought on this year’s yield.
The updated NBU forecast envisages that in 2024 inflation will accelerate to 8.5%, but will slow down to 6.6% in 2025 and return to the NBU target of 5% in 2026.
Source: Racurs
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