The National Bank of Ukraine (NBU) has continued easing its monetary policy, cutting the key rate by 1 percentage points (pp) to a five-year low of 10% per annum effective March 13.

At the same time, the regulator has reduced the rate for the sixth time in a row, after lowering it in January 2020, and in December, October, September, and July 2019.

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"In January-February, consumer inflation declined faster than foreseen in the forecast trajectory (reaching 3.2% year-over-year in January and 2.4% in February), remaining below the target range of 5% +/- 1 pp," the NBU said on its website on March 12.

As before, the regulator plans to decrease its key policy rate to 7% by the end of the current year. If there are favorable developments, and if the new Ukrainian government speeds up reform, the NBU will be able to ease its monetary policy more quickly, the report said.

"The risk arising from the global spread of the novel coronavirus could, if realized, drive the global economy into a recession and cause a significant slowdown in the Ukrainian economy. A dramatic decline in global demand and investors' revaluation of risks related to developing economies could affect Ukraine's external trade and make it more difficult for Ukraine to obtain financing," the regulator added.

Therefore, the NBU Board made its key policy rate decision when inflationary pressures were decreasing faster than expected, and the economy needed further support.

The next meeting of the NBU Board on monetary policy issues will be held on 23 April 2020, the regulator said.

As UNIAN reported earlier, on January 31, the National Bank continued easing its monetary policy, cutting the key rate by 2.5 percentage points to a three-year low of 11% per annum.

The regulator also plans to accelerate the key rate lowering to 7% at the end of 2020 from 9% projected earlier.

After its gradual decline this year, the rate will remain at 7% in 2021 and 2022.