13:58 04.06.2018

Weakening of monetary policy in 2018 unlikely, liberalization of currency restrictions possible – NBU

2 min read
Weakening of monetary policy in 2018 unlikely, liberalization of currency restrictions possible – NBU

 Most members of the monetary committee of the National Bank of Ukraine (NBU) advocates the idea of retaining tough monetary policy in 2018 if Ukraine continues cooperation with the International Monetary Fund (IMF), while they spoke in favor of weakening of currency regulation.

"Members of the monetary policy committee said that in case the situation develops under the baseline scenario, which implies continued cooperation with the IMF, it is advisable for the National Bank to further liberalize foreign exchange restrictions in order to support economic development," the NBU said in the minutes of the May meeting of the committee published on the website NBU.

"At the same time, the majority of the committee members agreed that the probability of reducing the refinancing rate by the end of this year is low," the NBU said.

In case of further delay of structural reforms and a lack of financial support from official creditors, the situation will develop in a different, alternative, base scenario.

The committee members believe that the failure to receive the IMF's tranche is not an excuse for raising the refinancing rate. Future decisions on the refinancing rate, in the event of developments under the alternative scenario, will depend on the assessment of the complex of risks.

At the same time, they warn: the Ukrainian economy, as before, depends on the situation on foreign markets, both financial and commodity ones. Consequently, the lack of financial support from official creditors increases the vulnerability of the country's economy and financial market, especially in conditions of limited access to world capital markets.

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