National Bank of Ukraine

August 3, 2017

From 30% two years ago, Ukraine’s key interest rate was reduced in a series of cuts by more than half to 14% in October 2016. It stayed at that level for a half year but was reduced 100 basis points this past April and a further 50 bps in May. The latest policy review, like that in July, kept the rate unchanged at 12.5%. According to a released statement, monetary official believe that June’s 15.6% headline inflation rate will be a cyclical peak. Core inflation is more contained at 6.8% but likely to rise in the near term. Remarks about the outlook for inflation are more hawkish than earlier in today’s most recent statement, and it concludes that “The need to return inflation to the target may require the NBU to keep its key policy rate at its current level until the central bank sees clear signs of alleviation of inflation risks (bold not added).”

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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