NBU keeps policy rate unchanged at 14%
27 January 2017
The board of directors of Ukraine’s central bank (NBU) decided to keep its policy rate unchanged at 14.0%, citing concerns about accelerating inflation triggered by doubled minimum wages and recent ForEx volatility, according to its Jan. 26 press release.
The last time the central bank revised its policy rate was on Oct. 27, cutting it by 1ppt from 15%. The Jan. 26 decision marks the second time since then that the board of directors decided to keep the policy rate unchanged.The next meeting of the NBU directors is scheduled for March 2.
Alexander Paraschiy: Inflation risks related to the doubled minimum wages (up to UAH 3,200 per year, or USD 115 per month) are being widely discussed and this tendency apparently disturbs the central bank. The regulator has already revised its 2017 inflation forecast (see another news) and most likely it will not rush with further policy rate cuts.
The disbursement of an anticipated IMF tranche, expected in the next few weeks, might bring more optimism to the NBU board of directors. However, the consequences of the minimum wage increase will continue to influence future decisions on policy rates.
