26 October 2023, Thursday, 16:59 334

NBU reduces discount rate from 20% to 16%, but keeps rates for transactions with banks

Editor: Daria Zubkova

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The Board of the National Bank of Ukraine (NBU) decided to reduce the discount rate from 20% to 16%.

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

The Board of the National Bank of Ukraine decided to set the discount rate at the level of 16% from October 27, 2023, equating it with the rate for overnight deposit certificates (ODC).

In this way, the National Bank is modernizing its operational design of monetary policy according to the "lower limit" system.

The rates for other operations of the NBU with banks are set as follows: the rate for three-month DS will be equal to the "accounting rate + 4 percentage points", and for refinancing loans - "the accounting rate + 6 percentage points".

So, in fact, the interest rates for the NBU's operations with banks will remain unchanged.

Such changes, in particular, will enable the NBU to keep short-term hryvnia interbank rates close to the discount rate.

As a result, the NBU's ability to influence the expectations of economic agents and the motives of their economic behavior will increase.

Keeping rates unchanged for the NBU's operations with banks is currently consistent with the need to maintain the attractiveness of hryvnia instruments, which is important for ensuring moderate inflation and exchange rate stability over the forecast horizon.

As Ukrainian News Agency earlier reported, on October 28, 2016, the NBU reduced the discount rate from 15% to 14%, and in December 2016 and January 2017 it kept it at the level of 14%, in April 2017 it reduced it to 13%, in May 2017 it reduced it 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 - to 17.5%, in September 2018 - to 18%, in April 2019 - reduced to 17.5%, in July 2019 - to 17%, in September 2019 - to 16.5%, in October 2019 - to 15.5%, in December 2019 - 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 2021 - to 7.5%, in July - to 8%, in September - to 8.5%, in December - to 9%, in January 2022 - by 1 p.p. to 10%, in June 2022 - by 15 p.p. to 25%.

In July 2023, the NBU reduced the discount rate from 25% to 22%, and in September - to 20%.