Ukraine central bank to cut rates further, possibly sharply, this year: Reuters poll

The National Bank of Ukraine will make at least one further cut in its key interest rate this year as price pressures ease, a Reuters poll of analysts showed on Tuesday.

Five of the 12 analysts surveyed expect the rate to end 2019 at 16.0%, down from the current 17.5%. Three saw the year-end rate at 17.0% and the others – in a range between 16.5% and 11%.

In late April, for the first time in two years, the central bank cut the rate from 18.0%, after inflation fell to 8.6% in March from 9.8% at the end of 2018.

It also signaled further cuts.

Read alsoNational Bank of Ukraine cuts key policy rate, first time in two years

"Inflation has been slowing better than expected, and we think the central bank will cut the rate gradually by 0.5 percentage point (reductions) to 16% by year-end," said Mykhailo Rebryk from Raiffeisen Bank Aval.

He said lower prices of gas and oil products – key Ukrainian imports – along with tough monetary conditions had helped bring inflation closer to the NBU's forecast.

The central bank sees inflation at 6.3% at the end of 2019 while the analysts’ median forecast was 7.8%.

The NBU said on Monday it was ready to launch a monetary easing cycle to encourage an increase in bank lending and underpin economic growth, but did not spell out what level it expected the rate to be at year-end.