It is the lowest level in the history of independent Ukraine.
From June 12, the National Bank reduced the discount rate from 8% to 6%. As the NBU Press Service stated, it is the lowest level in the history of independent Ukraine.
At the new discount rate, the overnight refinance loan will be provided at 7%, and the overnight deposit certificate will be kept at 5%, according to National Bank.
NBU has noted that inflation rose to around 2% in April-May and was lower than expected and 5% target was below the target range of 1 PPP.
National Bank of Ukraine
According to the NBU’s expectations, inflation will continue to grow at a moderate pace in the future, but will likely return to the target range than anticipated. The regulator adds this for several reasons:
- Consumer and investment demand remains depressed, although business activity is slowly resuming with the weakening of quarantine measures.
- The state of the foreign exchange market, on which the cost of the consumer basket depends to a large extent, is conducive to low inflation.
- The inflation expectations of population and financial analysts are improving. Now, according to the NBU, inflation, which they expect in 12 months, has caught up with the National Bank’s medium-term target.
In addition, the NBU positively referred to continued cooperation with the International Monetary Fund. On 9 June, the IMF Board of Directors adopted a new program of cooperation with Ukraine – stand-by arrangement – valued at approximately $ 18 billion, which lasted for 18 months. The first installment will be $ 2.1 billion.
National Bank of Ukraine
In addition, adolescents will ensure the creation of international reserves during 2020, despite “significant payments” to pay external public debt. A program with the IMF will also simplify Ukraine’s access to the international capital market, the regulator’s press service said.
The National Bank called the major risk for macro-financial stability – long-term coronavirus epidemic and quarantine measures. In addition, further implementation of structural reforms and the preservation of a balanced macroeconomic policy is important, the NBU emphasized.
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Earlier, we wrote that the NBU introduces a series of concessions for Ukrainian banks. From June 6 to June 20, fines and other penalties will not be imposed on banks and banking groups: violations of established requirements for capital adequacy, liquidity and credit risk, and violations of restrictions on transactions between banks and individuals associated with investors on subordinated debt. .
It is specified that the exemption would only apply to violations arising from the negative impact of restrictive measures on quarantine and bank or banking group activities that did not violate standards of capital adequacy and liquidity.
Read: What to look for when opening a deposit: Tips from NBU