The National Bank of Ukraine (NBU) has decided to lower the key interest rate from 16% to 15% effective December 15, the NBU said at a briefing. The decision was made in the context of slowing inflation and improving inflation expectations.
The head of the National Bank, Andriy Pyshny, explained that the reduction in the discount rate will help maintain the attractiveness of hryvnia savings instruments. Inflation in November decreased to 5.1%, which turned out to be faster than expected.
The reasons for the slowdown in inflation were the expansion of food supply from the new harvest and improved expectations against the backdrop of a stronger hryvnia exchange rate. The National Bank noted that risks of accelerating inflation remain due to logistical difficulties at the western borders and the possible exhaustion of the effects of the harvests.
Inflation rates are forecast to remain stable in December, but there are risks of acceleration due to the above factors. The NBU Chairman emphasized that the reduction in the discount rate will not create risks for the attractiveness of savings in hryvnia, and, taking into account the positive trends, the NBU will continue the cycle of easing interest rate policy.
From December 15, 2023, the accounting rate and other key rates will be reduced, which may affect various sectors of the financial market, such as deposits and lending.
