The Board of the National Bank of Ukraine decided to increase the discount rate to 14.5% per annum.
The NBU press service reported this today, January 23.
This decision is aimed at maintaining the stability of the foreign exchange market, keeping inflation expectations under control, reversing the inflation trend and gradually slowing inflation to 5%. Containing price pressures will likely require further strengthening of interest rate policy, it said.
It is noted that in 2024, inflation was 12%; price pressure continued at the beginning of this year.
In December 2024, inflation accelerated to 12% year on year, which exceeded the preliminary forecast of the NBU, the National Bank said. — According to NBU estimates, the acceleration of inflation continued in January.
The NBU notes that the high growth rates of consumer prices were influenced by the following factors:
- last year’s worst harvests;
- further acceleration of core inflation (up to 10.7% y/y in December), in particular due to the rapid rise in prices for services (12.5% y/y in December);
- At the same time, in recent months, to a certain extent, price growth was restrained by the strengthening of the hryvnia against the euro, which is important for Ukrainian imports.
However, expectations among financial analysts and banks remain relatively stable.
Thanks to the exhaustion of temporary factors of price pressure and the NBU’s interest rate and exchange rate policy measures, inflation will slow down to 8.4% in 2025 and to 5% in 2026, the National Bank believes.
However, the NBU predicts that in the first months of 2025, inflation will likely continue to rise due to the further influence of both temporary factors, in particular the effects of last year’s lower harvests, and fundamental ones, in particular pressure from business production costs.
Inflation will reach its peak in the second quarter and will begin to decline from the middle of the year, the National Bank expects.
Let us remind you that before this, the National Bank increased the discount rate in December 2024 – from 13.0% to 13.5% per annum.
Source: Racurs
I am David Wyatt, a professional writer and journalist for Buna Times. I specialize in the world section of news coverage, where I bring to light stories and issues that affect us globally. As a graduate of Journalism, I have always had the passion to spread knowledge through writing.