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The National Bank of Ukraine lowered its benchmark interest rate by 100bps to 15.5 percent on October 24th 2019, surprising markets who expected a 25bps reduction. It was the fourth rate cut this year, bringing borrowing cost to its lowest since December 2017 and in line with central bank expectations of lowering interest rates up to 8 percent at the end of 2021, as inflation is projected to ease to the 5 percent target. In September, annual inflation declined to 7.5 percent from 8.8 percent in August, the lowest since June 2016.

The National Bank of Ukraine lowered its benchmark interest rate for the second straight month by 50 bps to 16.5 percent on September 5th 2019, in line with market expectations. Policymakers said the cut is in line with reaching the 5 percent inflation target and reiterated that monetary policy easing will continue if risks to price stability continue to fall. Annual inflation rate rose to 9.1 percent in August, slightly higher than previously estimated by the central bank.

The National Bank of Ukraine lowered its benchmark interest rate by 50 bps to 17 percent on July 18th of 2019, surprising markets who expected a 25bps reduction. It was the second rate cut this year, bringing borrowing costs to its lowest since June of 2018 and in line with reaching inflation target of 5%. In June, annual inflation declined to 9.0 percent from 9.6 percent in May, in line with central bank estimates. Policymakers expect inflation to fall 6.3 percent by the end of 2019 and 5.0 percent by the end of 2020. Also, the National Bank raised its forecast for economic growth in 2019 (from 2.5 percent to 3.0 percent) and 2020 (from 2.9 percent to 3.2 percent), amid more stable domestic demand. The Board expects a further reduction of the interest rate to 8 percent over the next years.

The National Bank of Ukraine left its key policy rate unchanged at 17.5 percent on June 6th 2019, in line with market expectations. Policymakers said that keeping the borrowing cost at the lowest since August 2018 is needed to protect against inflationary risks and to bring inflation to the 5 percent target in 2020. Inflation accelerated to 8.8 percent in April from 8.6 percent in March, against the National Bank’s forecast, driven by higher prices of certain types of vegetables and fuels. The Bank also added that inflationary expectations slowly improved and domestic demand expanded rapidly while the Board continued to assume that further rate reductions may continue.

The National Bank of Ukraine lowered its benchmark interest rate by 50 bps to 17.5 percent on April 25th of 2019, matching market expectations and bringing borrowing costs to the lowest since August of 2018. Policymakers said the cut is in line with reaching inflation target of 5 percent. In March, annual inflation rate fell to 8.6 percent from 8.8 percent in February, in line with central bank estimates. Policymakers expect inflation to fall to 6.3% by the end of 2019 and 5.0% by the end of 2020. Also, GDP growth is seen slowing to 2.5% in 2019; and then accelerating to 2.9% in 2020 and 3.7% in 2021. Policymakers added further rate reductions will depend on the implementation of inflationary risks and the improvement of inflation expectations.

The National Bank of Ukraine left its key policy rate unchanged at 18 percent on March 14th 2019, in line with market expectations. Policymakers said that tight monetary policy is still needed to bring inflation to the 5 percent target in 2020. Inflation eased to 8.8 percent in February from 9.2 percent in January, like the central bank expected, mainly due to a tight policy and a stronger hryvnia. The inflation is seen falling to 6.3 percent in 2019 and to return to the target range of 5 percent ± 1 percent in the beginning of the next year. Policymakers added that the borrowing cost could be reduced in the future, depending on how steadily risks of inflation decrease and inflation expectations improve.