Analysts split on Ukraine's interest-rate forecast amid IMF delay

REUTERS Uncertainty over international aid has left economists split over where Ukrainian interest rates will go this week following a first cut in borrowing costs in almost two years at the central bank’s last meeting. Ukraine&#39;s key creditor, the International Monetary Fund, has said it will continue negotiations over financial assistance after snap parliamentary elections scheduled for July 21. With a government potentially only in place two months later, that means a delay to Ukraine’s current $3.9 billion program, Bloomberg reports. That could halt further monetary easing from the central bank. Five analysts in a Bloomberg survey predict the benchmark rate will be kept at 17.5% on Thursday, while half see it being lowered. Read alsoReports on possible default in Ukraine "rumors": Zelensky "Cooperation with the IMF is delayed for an unknown period," Oleksiy Blinov, head of research at Alfa Bank Ukraine, said by phone. "The central bank will probably take a pause in easing monetary policy and delay a rate cut until July." There are other reasons to hold fire on reducing eastern Europe’s highest benchmark borrowing costs. While the central bank said in April that inflation was "steadily declining," data released later showed consumer-price growth unexpectedly accelerated that same month. What&#39;s more, the hryvnia has lost 1.5% against the dollar in the past month, making it the region&#39;s worst performer. Politics are also volatile. The plan to hold early parliamentary elections, which was put forward by President Volodymyr Zelenskiy is being challenged at the Constitutional Court. Even if it goes ahead, the vote could produce another fragmented legislature, despite Zelensky&#39;s party leading polls. That would complicate fulfilling his anti-corruption agenda.

Analysts split on Ukraine's interest-rate forecast amid IMF delay

Please Subscribe For Full Access

UNIAN Web subscription