The National Bank has decided to reduce the discount rate to the level of two years ago, from 15.5% per annum, which it has been at since October 25 of this year, starting December 13. This is stated in the central bank’s statement
“The National Bank is accelerating the easing of monetary policy, as the rapid strengthening of the hryvnia exchange rate is leading to a faster-than-expected decrease in inflationary pressure,” the report says.
According to experts, any rate reduction is good. Its reduction is due to achieving the target inflation rate of 5% per annum. A reduction in the discount rate directly affects the cost of money in the economy (the higher the rate, the more expensive access to money).
After the rate reduction: loans for individuals will become cheaper. Loans for companies will also become cheaper, but not immediately, because the demand for them now significantly exceeds the supply of banks.
The yield on government bonds will also decrease, but investors’ interest in government securities will remain – just yesterday, the Ministry of Finance easily sold four-year bonds for UAH 3 billion with a yield of 11.6% per annum.
The Board of the National Bank believes that the new reduced discount rate will not prevent inflation from being maintained close to the target of 5% and at the same time will allow supporting economic growth.
The regulator recalled that according to the October forecast, it expects the discount rate to decrease to 8%, however, as part of the next revision of the macroeconomic forecast in January, it will publish an updated forecast of the discount rate dynamics. It will take into account, in particular, the impact on future inflation from consumer demand and the situation on the foreign exchange market.
According to materials from the ZN,UA publication
