The national Bank of Ukraine (NBU) increases from 13 July the discount rate by 0.5 percentage points (PP) to 17.5% to bring inflation to the target range in 2019.
As reported on the website of the Central Bank, the decision “rate” No. 443-rsh approved by its Board on 12 July 2018.
“In the second half of 2018 and in 2019 at the rate of inflation will be influenced by several factors, the effect of which, in contrast to the expected increase in administratively regulated prices and tariffs should be compensated by using the tools of monetary policy”, — stated in the message.
Among these factors, the NBU notes higher than previously expected domestic demand, including against the background of rising wages and the growth of remittances from labor migrants.
In addition, the impact on inflation will have a decline of investors ‘interest in Ukrainian sovereign liabilities as a result of a global trend of investors’ exit from emerging market assets, deferred receipt of funding under the cooperation programme with the International monetary Fund, as well as growing inflationary expectations, which continue to exceed the inflation target of the National Bank.
This is the fifth decision to raise the discount rate, the NBU increased the discount rate from 12.5% to 13.5% per annum 27 October 2017, and then to 14.5% per annum from December 15, 2017, up to 16% per annum from January 26, 2018, and up to 17% per annum from March 2, 2018.
The last time the Central Bank lowered the interest rate to 12.5% from 13% to 26 may 2017. To do this, the NBU reduced the rate from 14 April 2017 to 13% from 14% per annum, which was established on 28 October 2016.