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Economy 2019-09-23T04:02:12+03:00
Ukrainian news
NBU Lowers Discount Rate From 17% To 16.5%

NBU Lowers Discount Rate From 17% To 16.5%

The National Bank has lowered the discount rate from 17% to 16.5%.

The NBU has said this in a statement on the results of the meeting of the monetary committee, Ukrainian News Agency reports.

In July, inflation (9.1% on an annualized basis) was higher than the NBU forecast trajectory.

In August, according to estimates of the National Bank, inflation will decline, but it will still remain above the forecast trajectory.

This deviation is due primarily to temporary factors on the part of the supply of food, in particular vegetables.

At the same time, core inflation (7.4% on an annualized basis in July) was in line with the forecast of the National Bank.

Tight monetary policy remained a significant factor that restrained fundamental pressure on prices, in particular through the exchange rate channel.

As before, the NBU predicts the achievement of the medium-term inflation target of 5% at the end of next year.

The macroeconomic factors that have been observed since the last meeting of the board on monetary policy have not changed the balance of risks for the forecast.

On the one hand, the appreciation of the exchange rate, according to NBU estimates, will help slow inflation in the coming months.

The hryvnia was strengthened due to fundamental market factors, such as favorable pricing conditions on world commodity markets, a high grain yield, a further increase in the export of IT services, increased investor confidence in the Ukrainian economy and simplified access to the domestic government securities market.

This, in particular, led to a decrease in the repatriation of dividends and growth in demand for government loan bonds.

Although the inflow of foreign capital to the government loan bonds market has weakened significantly in recent weeks, the foreign exchange market has remained balanced.

Also, the current decline in oil and gas prices on world markets with a certain time lag will be displayed on domestic prices.

As Ukrainian News Agency earlier reported, since March 4, 2015, the NBU has raised the discount rate from 19.5% to 30%.

Later, the central bank retained the discount rate at the level of 30% several times.

On August 28, 2015, the central bank reduced the discount rate to 27%, and on September 25, 2015 - to 22%.

Since April 22, 2016, the National Bank reduced the discount rate from 22% to 19%, on May 27, 2016 - from 19% to 18%, on June 24 - from 18% to 16.5%.

On July 29, 2016, the National Bank reduced its discount rate from 16.5% to 15.5%, from September 16, 2016 - from 15.5% to 15%.

On October 28, 2016, NBU reduced discount rate from 15% to 14%, and in December 2016 and January 2017 - retained at 14%, in April 2017 - reduced to 13%, in May 2017 - reduced to 12.5% in October - increased to 13.5%, in December 2017 - to 14.5%, in January - to 16%, in March 2018 - to 17%, in July 2018 - raised to 17.5%, in September - to 18%, in April 2019 - lowered to 17.5%, in July 2019 - lowered to 17.0%.

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