The National Bank of Ukraine has decided to leave the key interest rate at 15.5% for the third time in a row. This was reported on the bank’s official website after the meeting, noting that there is currently no reason to lower interest rates. The main reasons are the negative impact of bad weather on the agricultural sector, as well as the intensification of Russian air attacks, which create additional pressure on business and contribute to inflation growth.
Reasons for leaving the rate unchanged
According to the report, the central bank is convinced that the current rate level is optimal for ensuring exchange rate and price stability. The increase in inflation remains controlled, therefore, according to the NBU, “is an important prerequisite for a sustainable slowdown in inflation to the target of 5%.
At the same time, the regulator does not see the need for an additional increase in rates, since the rate of price growth is within the forecast. However, there is currently no scope for monetary policy easing due to the slower-than-expected decline in inflation and potential risks to price stability.
Government’s views on monetary policy
Prime Minister of Ukraine Yulia Svyrydenko, in her first interview since taking office, expressed hope for a possible easing of monetary policy in the future. According to her, the National Bank may consider lowering the policy rate if inflation approaches the projected 9.5% by the end of the year. Such a step, she believes, would contribute to the restoration of bank lending, which is especially important for supporting the economy in wartime conditions.
