"We have next year’s inflation forecast and if we meet it our rates will be cut significantly," bank Governor Valeriya Gontareva told reporters in Kyiv on Thursday, Bloomberg reports.
"The discount rate will reach a sufficiently low level," said Gontareva.
The NBU earlier trimmed its benchmark to 22% from 27%, effective from September 25, citing “a gradual decline in risks to price stability." The recent slowdown in inflation will continue, Gontareva said.
Looser monetary policy reflects an easing in Ukraine’s economic and political crises, with the rate having risen to 30% to shield the hryvnia amid a recession and the war in the nation’s east. Parliament last week approved an accord to ease Ukraine’s foreign-debt burden and the latest stab at a cease-fire in the Donbas region is taking holding. The economy, while healing, faces challenges: It will shrink 11.5% in 2015, the central bank predicts.
The hryvnia, this year’s fifth-worst performer against the dollar among more than 140 currencies tracked by Bloomberg, has stabilized since a February low. It was 1% weaker at 21.406 versus the greenback at 15:00 Kyiv time on Thursday.
That’s helped bring inflation down to 53% from an April peak of almost 61%. The NBU sees consumer prices rising 12% next year.