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Banking & Financial Services

Policy Progress: The National Bank of Ukraine Cut the Key Policy Rate to 8%

Policy Progress: The National Bank of Ukraine Cut the Key Policy Rate to 8%

The American Chamber of Commerce in Ukraine welcomes the adoption of the National Bank of Ukraine (NBU) Board Decision #289-D dated April 23, 2020 aimed at reducing the key policy rate to 8% per annum. The continued monetary easing aims to support the economy during the period of pandemic and quarantine. This will lead to further reduction in interest rates on loans for businesses and households, thus stimulating business activity.

The NBU expects that the key policy rate to be reduced further, to 7% in the current year. In deciding how quickly the key policy rate can be decreased to that level, the NBU will take into account how talks with the IMF progress, how the coronavirus pandemic develops, how quickly quarantine measures are lifted, and what anti-crisis measures other governments and central banks adopt. The NBU leaves open the possibility of a greater easing in monetary policy if a fall in consumer demand due to quarantine measures and weaker business activity put stronger downward pressure on inflation than is currently expected.

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.