The National Bank of Ukraine: discussion on the discount rate and macroeconomic challenges

The National Bank of Ukraine (NBU) is actively debating the policy of the discount rate, gathering the opinions of 11 members of its Monetary Policy Committee (MPC). According to official NBU information, 9 out of 11 members supported the reduction of the discount rate from 13.5% to 13%. This decision was due to both the current positive macro-financial trends and the expected acceleration of inflation in the second half of the year, but at the same time, significant risks from the consequences of the war were taken into account.

One of the participants in the discussion advocated an even more decisive reduction of the discount rate to 12.5%, explaining it by the improvement of inflationary dynamics and the stability of inflationary expectations. Such a step can support economic recovery, provided the attractiveness of hryvnia deposits remains.

However, not all members of the KMP supported this point of view. One of them expressed outrage at the worsening balance of risks to inflation, especially given the growing pressures on the foreign exchange market and likely tax hikes. He considers it appropriate to stop at the current level of the rate and assess its impact after previous reductions.

According to the NBU, 7 out of 11 participants in the discussion support the opinion that there is potential for further reduction of the discount rate to at least 12-12.5% ​​by the end of the current year. This indicates broad support among members of the CMP for the strategy of softening monetary policy.

However, four members of the committee believe that this potential has already been exhausted, especially given the unexpected acceleration of inflation. They are of the opinion that the discount rate should remain unchanged at least until the end of the current year.

The decision of the National Bank of Ukraine regarding the discount rate is of strategic importance for stabilizing the financial system and promoting economic recovery in the face of internal and external challenges. It is expected that the NBU will continue to actively monitor the economic situation and make informed decisions to support stability and growth.