The National Bank of Ukraine (NBU) has decided to increase the refinancing rate from 14.5% to 16% beginning on 26 January 2018.
According to the message posted on the central bank’s official website, the decision #43-rsh on the size of the refinancing rate was approved by the National Bank of Ukraine Board on 25 January 2018, Interfax-Ukraine reports.
“A tougher monetary policy would help to gradually cut consumer inflation and to curb inflation to the target rate in 2019,” the National Bank said while commenting on the decision.
If inflationary pressure persists, the National Bank of Ukraine could increase the refinancing rate even higher aiming to curb inflation to the medium outlook target.
Acting Head of the National Bank Yakiv Smoliy said at a briefing on Thursday that the higher refinancing rate of 16% would discourage banks from investing in short-term assets.
“Currently, Ukraine’s government is entering the market and offering long-term domestic loan bonds. Those are more preferable for banks than the National Bank’s deposit certificates,” he explained.
Deputy Chairman of the National Bank of Ukraine Dmytro Solohuh said that the National Bank does not rule out that the monetary policy will be relaxed if inflationary factors are not as active as they are at present.