The NBU slashes prime rate by 250 bps down to 11%

UKRAINE - In Brief 30 Jan 2020 by Dmytro Boyarchuk
On January 30th, the NBU Board cut prime rate by 250 basic points down to 11%. Consumer inflation slowing to +4.1% ytd in 2019, as well as permanent complaints about expensive loans made the downward rate revision inevitable. At the press-release the NBU mentioned it’s new target of 7% for prime rate by the end of 2020 (8% previously). Next meeting of the Board will be on March 12. Further aggressive rate cut is expected next time too. Reduced prime rate have direct impact on state borrowings and FinanceMinister keeps repeating how glad she is about cheaper placements. But for businesses current easing policy does not bring any fruits. Crediting for private sector is shrinking and MinEcon even developed a program with subsidized loan rates. I would expect mounting pressure for more active easing steps apart of rate reduction.

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