Date: 4 weeks ago   Category: Financial

The National Bank for the first time in two years lowered discount rate


The national bank made the decision to lower discount rate by 0.5 percentage points up to 17.5% per annum. The National Bank of Ukraine (NBU) lowered discount rate by 0.5 percentage points up to 17.5% per annum. The decision comes into force since April 26, 2019, the press service of the NBU reports. "Now the steady tendency to delay of inflation to the purpose of 5% allows National bank to begin a cycle of decrease in discount rate. At the same time the board sees risks which realization can prevent it", - the head of the National Bank of Ukraine Yakov Smoly said at a press briefing. In March, 2019 consumer inflation continued to slow down - up to 8.6% in annual measurement. Basic inflation decreased even more promptly, than it was expected earlier - up to 7.6%. "It demonstrates that fundamental inflationary pressure at the beginning of a year continued to be weakened. Beginning a cycle of decrease in discount rate, the board of the NBU notes that further steps will depend on realization of inflationary risks and improvement of inflationary expectations", - the head of the National Bank of Ukraine added. The National Bank also predicts consumer inflation for the end of 2019 at the level of 6.3%. As noted in the NBU, it is expected that inflation for the end of 2020 will decrease to 5.0% "As well as it was predicted earlier, at the beginning of 2020 inflation will be included into limits of target range (5%/-1.p.). It first of all will be result of severe monetary conditions and reserved fiscal policy", - it is said in the statement of the NBU. The NBU also predicts delay of basic inflation to 5.0% in the current year and 3.7% in the following. Discount rate – an equivalent of cost of money in economy. At this rate of the NBU provides means to commercial banks, and those, in turn, credit natural persons and legal persons. Thus, discount rate influences the cost of credit resources. Increase in discount rate speaks about growth of the rate of inflation and falling of rates of economic growth in the country. Earlier in the NBU predicted decrease in the rate of inflation by the end of the year. According to inflationary forecasts of National Bank, for the end of 2019 inflation in Ukraine will decrease to about 6%. Let's remind, following the results of 2018 inflation in Ukraine grew by 9.8%. Thus, inflation last year was the lowest for the last five years: in 2013 - 0.5%, 2014 - 24.9%, 2015 - 43.3%, 2016 - 12.4%, 2017 - 13.7%. News from the Correspondent.net in Telegram. Subscribe for our https://t.me/korrespondentnet channel

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