The Board of the National Bank of Ukraine (NBU) has decided to reduce the discount rate to 13% per annum from April 14, 2017.
“The recovery cycle of monetary easing is consistent with the need to achieve inflation target in the years 2017-2019, and will support economic growth”, – explained the decision of the NBU.
The national Bank reminded that consumer price inflation in March 2017 was 15.1% in annual terms. The growth of prices accelerated mainly due to base effect and increase in production costs.
The actual acceleration of consumer inflation was expected and simultaneously below the path forecast of the National Bank, published in January 2017. Then the national Bank had expected in March, inflation accelerated to 16.4% per annum.
We will remind, past reducing the discount rate of the NBU held 28 October 2016, reducing the rate from 15% to 14%.
The national Bank uses the discount rate as a benchmark, how much it should cost money. In addition, the cost of refinancing of banks is also determined by the discount rate of the NBU at lower rates, banks will have to spend less money to service the refinance.