21 Jul 2022 14:56

NBU expectedly holds key rate at 25%, forecasting it at this level until at least Q2 2024

MOSCOW. July 21 (Interfax) - The National Bank of Ukraine (NBU) left its key policy rate unchanged at 25% per annum, which was expected by the market, and plans to keep it at this level at least until Q2 2024, the regulator said in a statement on its website.

"In view of the protracted period of significant pressures on prices and the prevalence of inflationary risks on the forecast horizon, coupled with the need to ensure the attractiveness of hryvnia assets and maintain exchange rate stability, the NBU Board decided to keep the key policy rate unchanged, at 25%," the statement reads.

The baseline scenario of the macroeconomic forecast envisages that the key policy rate will be maintained at 25% at least until Q2 2024.

At the same time, the balance of risks to the key policy rate forecast is assessed as having shifted upwards. If these risks materialize, the NBU could raise its key policy rate and interest rates on its monetary operations beyond their current levels in order to safeguard monetary stability and to ensure inflationary processes remain under control, the regulator said.

Meanwhile, according to the forecast schedule of the NBU key rate, it is expected to return to below 20% at the end of 2024.

According to the schedule, with a probability of 30%, the rate from Q1 2023 will be in the range of 23-32%, and by the end of 2024 - 19-27%.

With a 50% probability, the rate from Q2 2023 will be in the range of 18-38%, and by the end of 2024 it will be 13-34%.

Finally, with a 70% probability, the rate from Q2 2023 will be in the range of 15-47%, and by the end of 2024 it will be 8-42%.