NBU cuts prime rate to 13.0% amid increased confidence in financial inflows

UKRAINE - In Brief 15 Jun 2024 by Dmytro Boyarchuk
The NBU Board cut the prime rate once more by 0.5 ppts to 13.0%, effective June 14. This marks the third prime rate cut since the start of the year and the seventh decrease since July 2023, when the NBU began its easing cycle. In a press release, the NBU cited still-low inflation (+0.6% m/m and 3.3% y/y in May), which remains below projections, and the expected arrival of $2.2 billion from the IMF and €1.9 billion under the Ukraine Facility as factors allowing for another move in the easing cycle. At the same time, the NBU indicated that the already increased electricity tariffs from June and the potential increase in taxes will push inflation up in the coming months. In our view, improved confidence in financial inflows was the main reason behind the rate cut, while low inflation, no doubt, will not sustain for long.

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