NBU for the first time in 2 years, reduced the discount rate

The national Bank decided to reduce the discount rate by 0.5 percentage points to 17.5% per annum.

The national Bank of Ukraine (NBU) has lowered the interest rate by 0.5 percentage points to 17.5% per annum. The decision comes into force on 26 April 2019., the press service of the NBU.

“Now steady trend of slowing inflation to the target of 5% allows the National Bank to start the cycle of rate cuts. However, the Board sees the risks, the implementation of which can prevent it,” – said at a press briefing the head of the NBU Yakov Smoliy.

In March 2019 consumer inflation continued to slow – to 8.6% in annual terms. Core inflation declined even faster than expected to 7.6%.

“This suggests that the fundamental inflationary pressure in the beginning of the year continued to weaken. Starting the cycle of lowering interest rates, the NBU Board notes that further steps will depend on the realization of inflation risks and improving inflation expectations,” – said the head of the NBU.

The Bank also expects consumer inflation by the end of 2019 at 6.3%. As noted by the NBU, inflation is expected at the end of 2020 will decrease to 5.0%

“As predicted earlier, in early 2020, inflation will be within target range (5% +/- 1.p.). This primarily will be a result of tight monetary conditions and fiscal restraint”, – stated in the message NBU.

The Bank also predicts a slowdown in core inflation to 5.0% this year and 3.7% next.

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