Ukraine’s Third Interest Rate Hike of 2021

July 22, 2021

The National Bank of Ukraine delivered a surprise, lifting its policy interest rate by another 50 basis points. There had been earlier increases this year of 50 basis points in March and 100 basis points in April. In contrast, four big reductions in 2020 had reduced the rate from 12.5% to 6.0%. Core inflation has accelerated appreciably in Ukraine, and the overshoot of total CPI inflation there relative to a target range of 4-6% in the medium term has not only exceeded what officials been anticipating but also reflects more than mere temporary developments. Policymakers feel that the rate increases undertaken plus the likelihood of another 50-basis point advance will be needed in order to restore 5% inflation by next year.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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