Ukrainian central bank keeps interest rates at 25%
The National Bank decided to keep the key policy rate at 25% (Photo:NBU Press Center)
The National Bank of Ukraine (NBU) has decided to keep the key policy rate at 25% and introduce additional measures to ensure banking sector stability, NBU press service reported on March 17.
In particular, the question of introducing a set of additional measures to strengthen the competition of banks for retail term deposits is being considered. The central bank notes that such steps will further increase the attractiveness of savings in UAH, maintain the stability of the foreign exchange market, and create the preconditions for easing financial restrictions in the future.
"This will help protect households’ savings from inflation and will secure a decline in price pressure," the NBU said.
The regulator noted that inflation in early 2023 is decelerating faster than the regulator initially expected, but remains high. In February, it slowed to 24.9% YoY.
This slowdown in inflation was brought on by increased supply of food and fuel, rapid recovery of the energy system after the Russian attacks, and weaker consumer demand.
The growth in consumer prices is largely restrained by the official hryvnia exchange rate and utility tariffs.
Reportedly, NBU's previous measures, including keeping the key policy rate at 25%, raising mandatory reserve requirements, introducing new deposit products, and calibrating foreign currency restrictions, have contributed to hryvnia’s strengthening in the cash exchange market segment.
The NBU added that an important condition for ensuring macrofinancial stability is a regular flow of international financing, in particular from the expected IMF program.
Earlier, NV reported that several members of NBU’s board said key policy rate could be cut in 2023.
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