NBU lowers discount rate by 0.5 pp to 14.5%

The Board of the National Bank of Ukraine (NBU) has decided to reduce the discount rate by 0.5 percentage point from 15% to 14.5%.

This is stated in the message of the NBU, Ukrainian News Agency reports.

It is noted that in February inflation slowed to 4.3% in annual terms.

This, among other things, was facilitated by the greater supply of individual foods and the effects of last year's significant harvests.

In particular, due to warm weather and increased sales of products from storage facilities, prices for some vegetables decreased.

Some effect on food prices had a reorientation of individual producers to the domestic market.

In addition, inflation was further limited by a moratorium on raising a number of tariffs for housing and communal services.

Core inflation also slowed, to 4.5% YoY.

The stable situation in the foreign exchange market, provided, among other things, by measures of monetary policy and foreign exchange supervision of the NBU, contributed to the improvement of inflation and exchange rate expectations of most groups of respondents.

This limited fundamental price pressures.

The difference between the official and cash rates of the hryvnia is almost leveled, and the hryvnia exchange rate has fluctuated moderately both in one direction and in the other direction, as it implies the controlled flexibility of the exchange rate.

Since the previous monetary decision in January, market rates on hryvnia instruments have not undergone a noticeable change.

The profitability of bank deposits and government bonds continued to exceed the inflation expectations of businesses and citizens.

This, together with ensuring a controlled situation in the foreign exchange market, contributed to maintaining the interest of economic agents in savings in national currency.

In particular, investments of Ukrainians in government bonds were increasing, and deposits of the population for a period of three months were steadily growing.

As Ukrainian News Agency earlier reported, in October 2016, the NBU reduced the discount rate from 15% to 14%, in December 2016 and January 2017 - it was kept at the level of 14%, in April 2017 - it was reduced to 13%, in May 2017 - it was reduced to 12.5%, in October 2017 - increased to 13.5%, in December 2017 - to 14.5%, in January 2018 - to 16%, in March 2018 - to 17%, in July 2018 - to 17.5%, in September 2018 - to 18%, in April 2019 - reduced to 17.5%, in July 2019 - to 17%, in September - to 16.5%, in October - to 15.5%, in December - to 13.5%, in January 2020 - to 11%, in March - to 10%, in April - to 8%, in June - to 6%, in March 2021 – increased to 6.5%, in April - to 7%, in July - to 8%, in September - to 8.5%, in December - to 9%, in January 2022 - to 10%, in June 2022 - to 25%.

In July 2023, the NBU reduced the discount rate from 25% to 22%, in September - to 20%, in October - to 16%, in December - to 15%.