The National Bank of Ukraine (NBU) has decided from December 13, 2019 to cut its refinancing rate to the level, at which it was two years ago – 13.5% per annum from 15.5% per annum, which was set from October 25, 2019.

"The NBU speeds up the monetary policy easing, as the rapid appreciation of the hryvnia makes inflationary pressures decline faster than expected," the central bank said on Thursday.

The Board of the National Bank said that the stronger hryvnia made inflation decline towards the 5% target faster than envisaged in the latest macroeconomic forecast.

The NBU also said that it will revise the inflation forecast taking into account the situation in the foreign exchange market and will publish the updated macroeconomic forecast, including the future inflation path, at the end of January.

The regulator recalled that according to the October forecast, it plans to reduce the refinancing rate to 8%. However, as part of the next review of the macroeconomic forecast, in January it will publish an updated forecast of the pace of the refinancing rate. It will take into account, in particular, the impact on future inflation from consumer demand and the situation in the foreign exchange market.

In addition, the National Bank will continue taking into account the progress of key domestic reforms. These are both the reforms provided for in the memorandum on cooperation with the government, and judicial reform as a required prerequisite for ensuring the rule of law in Ukraine.

As reported, the NBU began a cycle of easing monetary policy rates on April 26 this year, lowering the refinancing rate to 17.5% per annum from the level of 18% per annum, at which the central bank kept it from the beginning of September 2018. Then, in the middle of July and early September of the current year, the National Bank lowered the refinancing rate by 0.5 p.p. each time, and at the end of October lowered it by 1 p.p.