Central bank doesn't plan to raise refinancing rate

The National Bank of Ukraine (NBU) doesn't plan to raise the refinancing rate, according to NBU First Deputy Governor Oleksandr Pysaruk.

"Frankly, [it] won't," he said in an answer to a question from Interfax-Ukraine whether the refinancing rate will be raised.

Director of the NBU Council Monetary Policy and Economic Analysis Department Serhiy Nikolaichuk wrote on the NBU's official Facebook page that a further drastic increase in the key interest rate is inexpedient.

"… In our opinion, a further drastic increase in the key interest rate is inexpedient, as inflationary pressure is expected to be gradually going down in the next few months amid the tough budget policy and stability on the forex market. Given the deep recession the country is facing now, a negative impact of high interest rates on economic activity should be also taken into account," he wrote.

The current levels of the consumer price index growth shouldn't be the grounds for an automatic adjustment of the NBU's key interest rate, as a decision to change this tool should rest mainly on inflation forecasts.

"According to our estimates, the NBU's refinancing rate will remain positive against inflation in 12-18 months, and inflationary indicators will not include the recent increase in administratively regulated tariffs," he said.

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