“Tame inflation. The NBU explained how the discount rate may change by the end of 2025 December 23, 14:24 Share: NBU (Photo: NBU Press Center) Assessment by members of the Monetary Policy Committee (MPC) of the National Bank of Ukraine (NBU) of the possible level of the discount rate for the end of 2025 varies in the range from 11% to 14% per annum. “Almost all members of the KMP agreed that in case of expected weakening of price pressure”, — write on: ua.news
NBU (Photo: NBU Press Center))
Assessment by members of the Monetary Policy Committee (KMP) of the National Bank of Ukraine (NBU) of the possible level of the discount rate at the end of 2025 varies in the range from 11% to 14% per annum.
“Almost all members of the KMP agreed that in the event of an expected weakening of price pressure in the second half of 2025, the NBU will be able to return to a cautious easing of the interest rate policy. However, the difference in their estimates regarding the possible level of the discount rate at the end of 2025 turned out to be significant — in the range of 11-14%,” says the NBU press release.
At the same time, given the current level of uncertainty for the economy, several members of the IMF refrained from providing estimates of the rate level for the long term until the update of the macro forecast in January 2025.
At the same time, most of the participants in the discussion emphasized the need to continue the cycle of strengthening the interest rate policy in the coming months in case of signs of stability of inflationary pressure and the threat of unbalancing inflationary expectations.
“Two of them assumed that the NBU will have to take a few more steps to increase the discount rate in January-April 2025 and did not rule out the need to strengthen the incentives of the operational design of monetary policy,” the release states.
According to these members of the KMP, the central bank should continue to actively smooth out excessive exchange rate fluctuations on the foreign exchange market.
At the same time, it is noted that several members of the Central Bank of Ukraine are not convinced of the need to increase the discount rate at the upcoming meetings, as they are convinced of the temporary nature of the inflationary surge, in particular due to the expected exhaustion of the effects of low harvests.
“In their opinion, maintaining the current level of monetary conditions will be enough to ease price pressure in the coming year. At the same time, the update of the macro forecast in January will provide more information about the stability of inflationary pressure,” their position is stated in the publication.
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As reported, the discount rate was increased from 10% to 25% in June 2022. Since then, the NBU has left it unchanged eight times. On July 27, 2023, the NBU lowered the discount rate to 22% for the first time in 13 months.
In September 2023, the discount rate was reduced to 20%.
Subsequently, in October, the NBU lowered the discount rate from 20% to 16%.
In December, the NBU lowered the discount rate to 15%, and in January 2024, it left it unchanged.
In March 2024, the board of the National Bank decided to reduce the discount rate from 15% to 14.5%.
On April 25, the NBU lowered the discount rate from 14.5% to 13.5%.
The NBU Board reduced the discount rate to 13.0% per annum from June 14, 2024.
On October 31, 2024, the NBU decided to keep the discount rate at 13% and announced its intention to keep it at this level until the summer of 2025, while earlier the central bank planned to return to its weakening from the first quarter of 2025.