The National Bank of Ukraine reduced the discount rate to 13%. This decision takes into account the current balance of risks, subdued inflation rates and continued improvement in inflation expectations.
“Another step to reduce the discount rate is consistent with maintaining the protection of hryvnia savings against inflation and at the same time will contribute to the further revival of lending, which is important for the recovery of the economy,” the NBU reported.
It is noted that in order to maintain control over inflationary expectations, maintain moderate inflation this year and return it to the target range of 5% ± 1 in. The NBU will continue the policy of protecting hryvnia savings from devaluation, as well as cover the structural deficit of the currency and smooth out excessive exchange rate fluctuations for the stability of the currency market.
International aid and internal measures to mobilize financial resources will make it possible to ensure significant expenditures of the state budget. Thus, in the coming weeks, foreign aid receipts are expected to increase, in particular $2.2 billion. USA if the Board of Directors of the IMF approves the fourth review under the EFF program of the IMF and 1.9 billion euros from the EU.
“The course of a full-scale war remains a key risk for inflationary dynamics and economic development. In addition, an additional contribution to the inflation indicator this year could be a potential increase in indirect taxes and excise duties to finance budget needs. At the same time, this will support the country’s defense capability and the sustainability of public finances. The probability remains implementation of a number of scenarios that will contribute to the reduction of inflationary pressure and revitalization of the economic recovery,” the NBU reported.
The basic scenario of the April macro forecast predicted a reduction of the discount rate to 13% in the current year. At the same time, in the event of a change in risks to inflation and the stability of the foreign exchange market, the NBU may revise the forecast trajectory of the discount rate.
