National Bank of Ukraine

January 26, 2017

The Ukrainian central bank interest rate was left unchanged at 14%. The same action was taken at the prior policy meeting in early December. A sharp decline of CPI inflation from 43.3% in 2015 to 12.4% last year had enabled officials to lower the interest rate from 30% in at the start of August 2015 to 14% after a 100-basis point cut late last October. But inflation has plateaued recently, and officials recently revised up projected inflation this year to 9.1% from 8.0%. In part, this reflects an increase in the minimum wage, which should stimulate personal consumption. In order to attain inflation targets of 6-10% this year and 4-8% in 2018, a more cautious approach to reducing the high central bank interest rate will be needed, according to a statement released today.

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

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