Ukraine's National Bank considers keeping key policy rate unchanged sufficient response to Middle East developments
The National Bank of Ukraine (NBU) currently considers maintaining its key policy rate at 15% to be a sufficient monetary policy response to developments in the Middle East, NBU Deputy Governor Volodymyr Lepushynsky said.
"For now, this response is sufficient; there is no need for any sharp moves. We do not know how long the war in the Middle East will last or how long elevated oil prices will persist, but it is clear that there is adaptation to a new price level," he said in an interview with Interfax-Ukraine.
If necessary, the central bank is ready to respond, but this would require meetings of the Monetary Policy Committee and the NBU Board, Lepushynsky noted.
He added that the next decision on the key policy rate at the end of April will be based on an updated macroeconomic forecast.
"If significant pro-inflationary risks persist, the NBU will refrain from easing policy, and if they intensify, it will be ready to raise the policy rate and take additional measures," Lepushynsky said.
As reported, at the end of January the regulator cut the key policy rate to 15% per annum from 15.5%, where it had been held for seven consecutive meetings. According to the updated forecast trajectory at that time, the policy rate was expected at 14.5% in the second quarter of this year (versus 14.1% in the previous forecast), 14.5% in the third quarter (versus 13.2%), and 14.5% in the fourth quarter (versus 12.7%).
However, in mid-March the NBU kept the key policy rate at 15% per annum. Later, the central bank said that seven out of eleven members of the Monetary Policy Committee expect maintaining the policy rate at 15% through the end of 2026, while one member even supports raising it.