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