The Board of the National Bank of Ukraine (NBU) decided to cut the key policy rate by 0.5 percentage points (pp), to 13.0% per annum effective June 14, 2024, NBU Governor Andriy Pyshnyy said at a briefing in Kyiv on Thursday.

"Taking into account the still moderate rate of inflation, ongoing improvement in inflation expectations, and the balance of risks for further inflation dynamics, the NBU board decided to cut the key policy rate by 0.5 pp, to 13.0%," he said.

Pyshnyy said that this step is consistent with the continued protection of hryvnia savings from being eroded away by inflation, while also contributing to a further revival of lending.

The National Bank, as before, expects inflation to accelerate moderately in the coming months and exceed the target range of 5% ± 1 percentage point by the end of the year.

Such price dynamics will be primarily driven by the persisting pressure on business costs during the war, harvests being expected to be somewhat weaker compared to last year's bumper crop, wage increases passing through to prices at a relatively fast pace, and a hike in electricity prices.

Together with a cut of the key policy rate by 0.5 percentage points, rates on three-month certificates of deposit and refinancing loans were also reduced – to 16% and 17%, respectively.

As reported, at the previous meeting in April, the National Bank unexpectedly lowered the key policy rate from 14.0% to 13.5%.