The NBU did not cut interest rates, despite the slowdown in inflation

НБУ не стал снижать учетную ставку, несмотря на замедление инфляции

NBU four months in a row keeps interest rates at 18%

The Central Bank allows for inflation due to the monetization of subsidies, the indexation of pensions and increase in other social costs.

The national Bank for the fourth time in a row decided to leave unchanged interest rate at 18% per annum. This was reported the Central Bank Thursday, 14 March.

The last time the Central Bank lowered the interest rate to 12.5% from 13% to 26 may 2017.

At the same time, the NBU preinflation see potential risks in the government’s plans to increase in the coming months is social spending.

“In the coming months a planned increase in social benefits and monetization of subsidies for payment for housing and communal services. Although the effect of these individual factors are minor, collectively their impact can be substantial if impact on inflation expectations in the face of increasing uncertainty in the year of double elections”, – stated in the message.

The NBU added that active strengthening of the hryvnia exchange rate, advancing the current forecast of the Central Bank, on the contrary, contributes to slowing inflation.

As reported in February inflation slowed by half, from 1% to 0.5%. Since the beginning of the year, prices in Ukraine increased by 1.5%. In annual terms (by February 2018) inflation slowed to 8.8%.

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.

 

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