The Board of the National Bank of Ukraine has decided to cut the refinancing rate to 19% from 22%, according to the NBU’s press release, Joinfo.ua reports.
The rate will be effective from April 22, 2016. According to the statement, this move has been prompted by the need to enhance the effectiveness of monetary instruments tostrengthen the NBU’s capacity to implement monetary policy in the context of inflation targeting.
NBU also reported that in March 2016, as expected, the disinflation trend continued, with annual headline inflation moderating to 20.9%.
Inflationary pressures have been dampened due to the authorities’ commitment to prudent monetary and fiscal policy, subdued domestic demand, and stabilization of inflation expectations.
The NBU has also kept its headline inflation projection unchanged at 12% by the end of 2016 and 8% by the end of 2017, which is consistent with its inflation objectives.
The NBU has kept its 2016 outlook for economic activity unchanged. Real GDP is expected to rise by 1.1% in 2016 and by 3% in 2017. Inparticular, the NBU has also kept its forecast for the current account deficit unchanged (USD 2.3 billion or 2.7% of GDP in 2016 and USD 1.8 billionor 1.9% of GDP in 2017).