Ukraine central bank keeps policy rate at 14%
3 March 2017
The board of the National Bank of Ukraine (NBU) decided on March 3 to keep its policy rate unchanged at 14.0%, a press release said. The regulator mentioned that inflation sped up in January on the back of doubled minimum wages and growing resource prices, a trend that it expects will continue in February.
Inflationary risks increased due to a trade blockade of the occupied territories of Donbas, the NBU said. The recent inflationary trends, and risks related to Donbas prompted the NBU board to be cautious about a further policy rate cut. Meanwhile, the NBU kept its year-end inflation target at 8% (+/- 2ppt) for 2017.
The next meeting of the NBU directors on policy rate revision will be held on April 13.
Alexander Paraschiy: The current situation is rather uncertain as the blockade hasn’t reached a critical level and even the slightly accelerating inflation does not look dramatic. What’s more, the hryvnia remains stable despite the blockade. Still, the bubbling political tension is not the best background for a further monetary easing. But if nothing outstanding happens by April and the IMF finally approves its next wire for Ukraine, the NBU could decide to reduce the policy rate after at the next board meeting.
