The Board of the National Bank of Ukraine (NBU) has decided to cut the discount rate from Aug. 28 percent, 2015, from 30 to 27 percent per annum, the regulator said on Aug. 27.
“Taking into account the reduction of inflation risks, the board of the National Bank of Ukraine believes that it is possible to start mitigating the monetary and credit policy agreed with the forecasted fall of the annual inflation,” the central bank said in a press release.
According to the press release, by adhering to a tough monetary and credit policy the NBU has over the last six months considerably helped to cut inflation and devaluation expectations, stabilize the currency market, and form a stable trend of slow inflation.
The NBU said that the consumer price index in annual terms is falling for the third month in a row, and in a monthly comparison, deflation was recorded.
“The improvement of the situation on the currency market and stabilization of inflation expectations promotes the return of deposits to the banking system,” the NBU said.
The regulator said that the central bank expects that the disinflationary trend will be retained thanks to continued stability on the currency market, completion of the main waive of the increase of utilities tariffs, and the somewhat slow restoration of consumer demand. An additional factor would be a large grain, vegetables and fruit harvest.
“Despite the reduction of the discount rate from the high current level, the monetary and credit policy would remain rather tough to support the disinflationary trend and prevent the impact of external shocks on the Ukrainian economy,” the NBU said.
The NBU increased its discount and refinancing rate to 30 percent per annum from March 4, 2015. From Feb. 9, a rate of 19.5 percent, and from November 13, 2014, a rate of 14 percent was in effect.
