NBU keeps prime rate unchanged at 15%, updates forecast

UKRAINE - In Brief 26 Jan 2024 by Dmytro Boyarchuk
As expected, the NBU Board left the prime rate unchanged at 15% on January 25th. Following a month of FX market turbulence, pausing rate cuts was a natural decision, particularly in light of the still-delayed financial support decisions from both the EU and the US for 2024. The press release suggests that a minor prime rate cut might occur in the second half of 2024, but it also states that any further cuts will only be made if conditions are favorable. Notably, the NBU has revised its inflation forecast downward to +8.6% YTD from the previously estimated 9.8% YTD. Additionally, the NBU has worsened its external account forecast for 2024. This could indicate that the NBU has moderated its plans for adjusting the hryvnia, which should slow the pace of inflation but may maintain a higher trade deficit.

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