The NBU slashes prime rate by 200 bps, down to 6%

UKRAINE - In Brief 11 Jun 2020 by Dmytro Boyarchuk
The NBU Board slashed prime rate by 200 basis points down to 6% today. The lowest level in Ukraine’s history. New IMF program, slowing inflation (+0.3% m/m or +1.7% y/y in May), and strengthening national currency created positive background for more aggressive easing steps. Economic situation has normalized, businesses are looking for recovery amid easing quarantine restrictions. Dominating view among opinion-makers – the worst is over. Against this backdrop generous prime rate cut was widely discussed and was expected. Remarkably, at the press-release the NBU mentioned “the end of the cycle of rapid monetary policy easing” meaning the NBU now will sit and wait how the ‘easing cycle’ is reflecting on economy. In other words, over the upcoming months the prime rate likely will remain unchanged. Next meeting of the Board will be on July 23.

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