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Banking & Financial Services

Policy Progress: The National Bank of Ukraine Cut the Key Policy Rate to 11%

Policy Progress: The National Bank of Ukraine Cut the Key Policy Rate to 11%

The American Chamber of Commerce in Ukraine welcomes the adoption of the National Bank of Ukraine (NBU) Board Decision #76-D dated January 30, 2020 aimed at reducing the key policy rate to 11% per annum. In light of more rapid improvement of Ukraine’s macroeconomic conditions, the NBU expects to cut the key policy rate to 7% by the end of 2020. This will lead to further reduction in interest rates on loans for businesses and households, thus stimulating business activity.

In 2020 economic growth will accelerate to 3.5%, up from 3.3% in 2019, while accelerating to around 4% in the following years. The monetary policy easing will contribute to the faster economic growth. High private consumption and investment will remain the main economic growth drivers. As before, the NBU believes any delay in entering into a new cooperation agreement with the IMF to be the key risk to the said macroeconomic forecast. Risks to macrofinancial stability also persist. These risks could mainly arise from Ukrainian court rulings on the responsibility and liability of the former owners of insolvent banks to the state.

We welcome this positive step, though there are still a number of steps to be taken on the way to monetary policy easing and full liberalization of currency market. The Chamber will take every single effort for achieving mentioned goals and ensuring their effective implementation.