Ukraine's National Bank Cuts Discount Rate To 8.5%.

The National Bank of Ukraine (NBU) decided to reduce its discount rate by 1% to 8.5% starting from June 10, 2006. Concorde Capital: After a one and a half year of tightening its monetary policy to contain inflation, the NBU has steadily eased the pressure since the start of the year. In March, the NBU reduced the volume of mandatory reserves for banks by 20 percentage points to 100% of the sums of the mandatory reserve that they must keep in their correspondent accounts with the NBU at the start of an operating day; further in May, it cut the rate of reserves made by banks in customers’ current accounts from 8% to 6% and deposit accounts from 6% to 4%. Following these moves the lowering of the discount rate cutting was not a surprise, and is quite in line with further loosening of monetary policy. The current “non-inflationary” rate of monetary expansion allows the NBU to urge economic growth by supporting the growth of further lending.