Ukraine’s central bank trimmed borrowing costs for a second consecutive meeting, pressing ahead with monetary easing after inflation dropped into single-digit territory.
(Bloomberg) — Ukraine’s central bank trimmed borrowing costs for a second consecutive meeting, pressing ahead with monetary easing after inflation dropped into single-digit territory.
Policymakers in Kyiv cut the benchmark interest rate by two percentage points to 20% on Thursday, according to a statement. The National Bank of Ukraine reduced the rate by three percentage points in July for the first time since Russia’s invasion prompted central bankers to ratchet borrowing costs up to 25% in June 2022.
Ukraine’s economy has been battered as the Russian attacks devastated a swathe of the country’s infrastructure, throttled grain exports and squeezed demand. But fears of spiraling inflation have been kept in check by ebbing commodity prices globally, tight monetary policy and a stable hryvnia.
“Looking ahead, the NBU plans to continue its key policy rate cutting cycle, while balancing the cuts against the need to maintain the attractiveness of hryvnia assets,” the central bank said in a statement.
Consumer prices confounded expectations in August, rising 8.6% annually after economists had predicted more than 10%. The figure was 11.3% in July.
The bank’s board lowered interest rates on overnight deposit certificates by two percentage points to 16% — and two points to 22% for refinancing loans.
Reflecting confidence in a more buoyant economy, the central bank is easing currency controls that were imposed at the start of the war, helped by an influx of foreign aid and the resilience of local businesses. The NBU last month expanded the limit on foreign-currency purchases, giving households more options to shield their savings.
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