Key policy rate might lower to 8% in 2020, Smoliy says

13 January 2020

The key policy rate of the National Bank of Ukraine (NBU) might be lowered to 8% in 2020, Governor Yakiv Smoliy told the KRYM YouTube channel in an interview published on Jan. 8. Though the NBU had planned earlier to reach this target in 2021, the current economic conditions call for a faster lowering of the key policy rate, he said.

 

Evgeniya Akhtyrko: Smoliy’s interview, which was recorded on Dec. 27, implies that the unexpectedly fast inflation cooling in November to 5.1% yoy prompted the NBU to revise its plans on monetary softening in 2020.

 

The December’s deflation of 0.2% m/m, which brought 2019 inflation even lower to 4.1% yoy, only magnifies the need for a respective adjustment of monetary policy. We are likely to see an updated forecast of the key policy rate in the NBU's January inflation report.

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