NBU predicts reduction in refinancing rate to 8% by late 2021 under baseline scenario
The National Bank of Ukraine (NBU) will reduce the refinancing rate to 8% in the fourth quarter of 2021 if inflation steadily declines to the target of 5%, the corresponding forecast has been announced by the central bank.
"The NBU's baseline scenario envisages the key policy rate to decrease further, to 8% over the coming years, provided that inflation steadily declines to the 5% target," NBU Governor Yakiv Smolii said.
"The largest decrease is expected over 2020, along with inflation returning to the target range and inflation expectations improving. If existing inflation risks, both internal and external, materialize, the key policy rate could decline to 8% more slowly. At the same time, higher demand for hryvnia government bonds from non-residents and the subsequent strengthening of the hryvnia will allow reducing the key policy rate at a faster pace than envisaged in the baseline scenario," the banker stressed.