NBU Ready To Start Reducing Discount Rate Earlier Than Forecast

The National Bank is ready to start a cycle of lowering the discount rate earlier than April macro forecast predicted.

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

The National Bank is ready to do this if the growth of the real profitability of hryvnia instruments and the reduction of risks to exchange rate stability continue to occur faster than expected.

This can be facilitated more rapidly than the forecast of a slowdown in consumer and basic inflation and the growth of international reserves, as well as the best effectiveness of measures to ensure the attractiveness of hryvnia instruments.

The obstacle to a faster transition to a cycle of lowering the discount rate may be new challenges for exchange rate stability and a steady reduction in inflation due to the Russian invasion.

As Ukrainian News Agency earlier reported, the updated macro forecast of the NBU provides for the beginning of the cycle of reduction of the discount rate in the 4th quarter of 2023.

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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