National Bank of Ukraine

September 15, 2016

Citing the continuing “alleviation” of risks to price stability, Ukraine monetary officials cut their policy interest rate for the fourth time since May and the sixth time in thirteen months. The new policy rate of 15.0% is only half as much as the 30% level prior to a 300-basis point reduction in August 2015. Today’s cut, however, was the smallest in the sequence of six reductions, amounting to 50 basis points versus cuts of 100 bps in July, 150 bps in June and 400 bps in May. A statement from officials today identifies three factors reducing core inflation, which now stands at 7.4%: low aggregate demand, abundant food supplies, and sufficiently restrained monetary policy. Officials expect total inflation to hover around this year’s target center of 12% in the final quarter and to lie within the 2017 target range, whose center is 8%, next year. Presuming that risks to inflation continue to recede as expect, officials anticipate more reductions in their policy interest rate. Their next meeting is scheduled October 27.

Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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