Updated NBU Macro Forecast Provides For Beginning Of Cycle Of Discount Rate Reduction In Q4

The updated macro forecast of the NBU provides for the beginning of the cycle of reduction of the discount rate in the fourth quarter of 2023.

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

It is reported that the NBU is ready to adjust the time and pace of changes in the discount rate, taking into account the further development of events in the foreign exchange market, inflation dynamics, the sustainability of international support and the effectiveness of measures to ensure the attractiveness of hryvnia instruments.

"Maintaining the discount rate at a high level will support the effects of previous NBU measures and will leave room for further growth of the attractiveness of savings in hryvnia. At the same time, the improvement of the macroeconomic situation, including a faster decrease in inflation and the accumulation of a comfortable level of international reserves, creates prerequisites for revising the forecast of the discount rate," the statement said.

The updated macro forecast provides for the beginning of the cycle of discount rate reduction in the fourth quarter of 2023.

Even under this scenario, monetary conditions will remain tough enough on the forecast horizon given the further slowdown in inflation, improving inflation expectations and, accordingly, maintaining a high real return on hryvnia instruments.

As Ukrainian News Agency earlier reported, on October 28, 2016, the NBU reduced the discount rate from 15% to 14%, in December 2016 and January 2017 - it was kept at 14%, in April 2017 - it was reduced to 13%, in May 2017 - it was reduced to 12.5%, in October - 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%.

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