The NBU starts easing cycle, cuts prime rate by 3 ppt to 22%

UKRAINE - In Brief 27 Jul 2023 by Dmytro Boyarchuk
The recovering economy, slowing inflation, and stabilized FX market have prompted the NBU Board to initiate an easing cycle, beginning with a prime rate cut of 3 ppt, down to 22%. This marks the first rate cut since the large-scale invasion began. The NBU also indicates that further easing is expected, barring any deterioration of economic fundamentals. Additionally, the overnight deposit certificate rate was cut by 2 ppt to 18%, and the refinancing rate was reduced by 3 ppt to 24%. The NBU has revised its inflation forecast downward to 10.6% in 2023, compared to the previously projected 14.8%. No utility tariff revision is expected.  For 2024, the CPI is expected to ease to 8.5%, and further decrease to 6% by 2025. The regulator has also revised the GDP growth forecast upward to 2.9% y/y for 2023, up from the previously estimated 2.0%. The positive trends observed in the first half of the year are encouraging for the NBU. Notably, the regulator did not consider the "grain corridor" as a base case scenario for its forecasts. Furthermore, the NBU predicts that intense military actions will continue until mid-2024. The NBU's communication largely leans toward the positive or even optimistic. The rate cut of 3 ppt is quite significant, signaling that the NBU is indeed bullish about current trends. Surprisingly, this optimism assumes that there will be no resumption of the grain deal and that military actions will continue for at least another year. It seems the NBU might know something that ordinary people do not. Let's hope the regulator's positive expectations become a reality.

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2024 GlobalSource Partners. All rights reserved. This is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this or its contents.