Ukraine's National Bank expectedly raises discount rate to 9% | Domestic Policy Matters

Ukraine's National Bank expectedly raises discount rate to 9% per annum
It is noted that the NBU is ready to further increase the discount rate in the event of further implementation of pro-inflationary risks
The National Bank of Ukraine (NBU), as expected, raised the discount rate to 9% per annum from the current 8.5% as the NBU reported.

"The Board of the National Bank has decided to raise the discount rate to 9% per annum. This decision is aimed at leveling the impact of additional pro-inflationary risks, improving inflation expectations, and ensuring a steady decline in inflation to 5%,” it was reported.

It is noted that the NBU is ready to further increase the discount rate in the event of further implementation of pro-inflationary risks. At the same time, it is noted that the peak of the inflationary surge has passed; however, inflation is declining more slowly than expected. In October, consumer price growth slowed to 10.9% on annual basis and inflation continued to slow in November due to the exhaustion of last year's low comparison base, better yields, administrative decisions on utility tariffs and the impact of previous decisions to strengthen monetary policy.

At the same time, the trajectory of inflation remains higher than expected by the October macro forecast of the National Bank due to increased pressure on prices of an increasingly wide range of consumer goods and services through the secondary effects of higher prices for food products and energy resources, as well as an increase in business costs for logistics and wages.