The Board of the National Bank of Ukraine has taken a decision to cut its key policy rate to 15.5% per annum effective 25 October 2019. The NBU continues the cycle of monetary policy easing as inflation is firmly declining towards the target of 5%.
In September 2019, consumer inflation declined to 7.5% yoy, below the forecast published in the July Inflation Report. Inflation continued to slow in October according to the NBU’s preliminary estimates.
The steady disinflation has been driven by a gradual easing of underlying pressures on prices, reflected in a rapid slowdown of core inflation. The tight monetary policy was one of the reasons behind the strengthening of the hryvnia and improvement in inflation expectations. That has a major impact on prices, surpassing the effect of factors that push prices upwards, particularly the effect of the sustained consumer demand.
Compared to the July macroeconomic forecast, the NBU has revised its economic growth forecast upwards, to 3.5% in 2019 and 2020 and 4% in 2021. The revision was driven by the sustained domestic demand, higher productivity in agricultural production, and improved consumer sentiment.
The decision to cut the key policy rate to 15.5% was approved by NBU Board Decision No.797-D On the Key Policy Rate, dated 24 October 2019.
