NBU increases discount rate and refinance cost

22 July 2021, 19:58 | Finance and Banking
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The National Bank of Ukraine raised the discount rate by 0.5 percentage points to 8% in response to accelerating inflation, which will exceed 10% this year. The decision was made by the Board of the National Bank at a meeting on July 22.

" The dynamics is due to temporary factors - the growth of world prices for food and energy resources, as well as the strengthening of fundamental inflationary pressures, - the NBU release says.. - core inflation in June accelerated to 7.3% y / y (April forecast - 6.8% y / y) primarily due to continued high consumer demand and growth in production costs of enterprises, including labor costs "

According to the forecast of the National Bank, inflation in the near future will "

"

National Bank downgraded inflation forecast in 2021 from 8 to 9.6%. To reduce the rate of price growth to the range of 5% + / - 1, the National Bank intends to increase the discount rate to 8.5% and keep it at this level, at least until the second quarter of 2022.

The regulator also decided on additional anti-inflationary measures..

In particular, the NBU is changing the design of monetary policy: from July 23, the cost of refinancing loans from banks increases. In particular, the refinancing rate for up to 90 days (provided for quantitative tenders) will be determined by the formula " The refinance rate for a period of up to 3 years (interest tenders) is set at a level not less than the " "

In addition, from August 1, the NBU will reduce the daily volume of foreign exchange redemption in the interbank market from $ 20 million to $ 5 million..

In June, the NBU decided not to change the discount rate (7.5%). At the same time, the regulator began to gradually phase out anti-crisis monetary instruments (long-term refinancing). This was expected to strengthen the effect of previous hikes in the discount rate and help slow inflation.. On April 15, the National Bank raised the discount rate by 1 p.. up to 7.5%. Also, the NBU downgraded the forecasts for inflation and economic growth at the end of 2021. LIGABiznesInform informs about it.




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