NBU lowered the discount rate to 16.5%

НБУ понизил учетную ставку до 16,5%

The national Bank continued the easing cycle of monetary policy

Internal political risks in order to reduce inflation to the target weakened with the beginning of work of the Verkhovna Rada of the new convocation and the formation of a new government, the national Bank noted.

The national Bank of Ukraine decided from September 6 to lower the discount rate to 16.5% from 17% per annum. This was reported on the website of the regulator on Thursday, September 5.

“The national Bank continued the easing cycle of monetary policy because they expect the deceleration of inflation to the target 5%”, – stated in the message.

The Board of the national Bank noted that domestic political risks in order to reduce inflation to the target weakened with the beginning of work of the Verkhovna Rada of the new convocation and the formation of a new government. According to the regulator, this opens up the possibility for intensification of the negotiations with the IMF a new program of cooperation.

At the same time, the Central Bank pointed to the preservation as internal threats to financial stability (trials around the nationalization of PrivatBank) and external – the termination of gas transit from Russia since the beginning of 2020, the strengthening of trade wars and turbulence on financah in the world, the escalation of the military conflict, and new trade restrictions, the Russian Federation.

Discount rate – the equivalent value of money in the economy. At this rate, the Bank provides funds to commercial banks who in turn lend to individuals and legal entities. Thus, the discount rate affects the cost of credit.

The rate increase shows the growth of inflation and falling economic growth in the country.

Recall, on 18 July, the NBU decided to reduce the discount rate from 17.5% to 17.0% per annum. Also in the first national Bank made the forecast on the discount rate.

And 26 April, the NBU for the first time in two years reduced the rate from 18% to 17.5%. Before that, the regulator raised the discount rate six times. And in June the national Bank decided to keep interest rates at 17.5% per annum.

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