“NBU again kept the key policy rate at 15.5%The National Bank of Ukraine has once again decided to leave the key policy rate unchanged. It remains at 15.5%.
”, — write: unn.ua
The Board of the National Bank decided to keep the key policy rate at 15.5%. This will allow to continue maintaining appropriate monetary conditions for the stability of the foreign exchange market, controlled expectations and bringing inflation to the 5% target. The National Bank is ready to flexibly respond to changes in the distribution of risks
The regulator explained why such a decision was made:
1) Inflation is consolidating on a downward trajectory, but is still high. The growth rate of consumer prices has been slowing for three consecutive months – to 13.2% y/y in August.
This decrease in overall inflation was faster than the NBU predicted. At the same time, core inflation slowed down close to the forecast – to 11.4% y/y. Further inflation reduction is expected
2) According to the NBU, inflation expectations of households and financial analysts improved in August. However, the expectations of most respondent groups still remained at a double-digit level.
3) External assistance is arriving in sufficient volumes to maintain international reserves at an appropriate level and finance the budget deficit. Since the beginning of the year, Ukraine has received more than 30 billion US dollars in international financial assistance, the NBU emphasized.
4) In recent months, the volume of public investments in term deposits and government bonds in hryvnia has increased, and net demand for foreign currency from the public has been restrained. “The NBU will continue to take measures to maintain sufficient attractiveness of hryvnia assets. This, together with maintaining a stable situation on the foreign exchange market, will contribute to the controllability of inflation expectations and further reduction of inflation,” – the regulator noted.
5) The NBU indicated that the course of the full-scale war remains the main risk for inflation dynamics and economic development. The high intensity of shelling and destruction increases the risks of reducing the country’s economic potential. In addition, the risks of additional budget expenditures, including for defense, have become more relevant. At the same time, positive scenarios can also be realized, primarily related to strengthening military and financial support from partners.
The NBU’s July forecast, as indicated, envisages the start of the key policy rate reduction cycle in Q4 2025.
Although inflation is consolidating on a downward trajectory, pro-inflationary risks remain. The National Bank will closely monitor the development of the situation. In case of realization or intensification of pro-inflationary risks, the NBU will be ready to postpone the reduction of the key policy rate, and if necessary, take additional measures
NBU: discount rate may be maintained for longer, but easing is possible in the second half of the year16.06.25, 14:34 • 2169 views