Loans can probably still become cheaper after the National Bank of Ukraine (NBU) cut the key policy rate from 16% to 15% per annum in December, NBU Deputy Governor Serhiy Nikolaychuk says.

"At the same time, we do not expect a significant reduction in deposit rates, especially on time deposits in hryvnia, given precisely the incentives that we provide to banks using our auxiliary instrument - three-month certificates of deposit," he said in an interview with Interfax-Ukraine.

Nikolaychuk explained that in the situation with loans, rates depend mainly on the criterion of riskiness of borrowers, while in the corporate sector the situation with the creditworthiness of borrowers is improving, judging by the dynamics of non-performing loans and the effectiveness of state lending programs.

The deputy governor of the National Bank expressed hope that the reduction in lending rates would occur due to a decrease in the risk premium.

"The National Bank, together with its partners, is developing a lending development strategy, a significant part of which should be aimed at significantly reducing this risk premium in lending rates, especially for the corporate sector. This is our priority medium-term task," Nikolaychuk added.

Speaking about the likelihood of a change in the key policy rate in 2024, he indicated that the October forecast, according to which the key policy rate would remain at 15% throughout the year, is relevant.

The deputy governor of the National Bank recalled that the key policy rate would depend on the situation in the financial sector, the level of inflation, the state of the foreign exchange market, international reserves and receipts of international assistance.

"During the discussion at the Monetary Policy Committee (in December 2023), the majority of its members saw a higher probability that these factors next year would be favorable to allow the National Bank to reduce the key policy rate by 1-2 percentage points," Nikolaychuk noted .

He also assured that in the new forecast cycle, which will end with the publication of an updated macroeconomic forecast on January 25, new assumptions will be taken into account, and the regulator will present new estimates, including regarding the discount rate.

"Whether in this forecast the rate will remain at 15% for the entire 2024 or it will be different, I cannot tell you now," the deputy governor of the NBU concluded.