Photo from UNIAN
In December 2019, the regulator reduced the rate for the fourth time in a row, after lowering it in October, September, and July.
Governor of the National Bank of Ukraine (NBU) Yakiv Smolii says the regulator, within the gradual liberalization of monetary policy, allows a further reduction in the key policy rate to 8% if a favorable macroeconomic situation is maintained.
"If the macroeconomic situation doesn't change dramatically, the key rate may be 8%. We planned to lower it to such a level in 2021. Now we're seeing the prerequisites for the monetary policy to be eased more rapidly. Therefore, businesses could expect interest rates on loans in the hryvnia [Ukraine's national currency] at 10%-12% per annum," he said, as reported by the NBU's press service on Facebook on January 9.
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The regulator also bought US$600 million on the market in the first quarter of 2019 (Q1), US$700 million in Q2, US$2.5 billion in Q3, and US$4 billion in Q4, the press service said.
"To say that the [hryvnia] exchange rate is strengthening only due to investment in government domestic loan bonds wouldn't be quite right ... The volume of investment in government securities is just over US$4 billion, while the NBU bought almost US$8 billion. The currency supply in the market was high," Smolii said.
As UNIAN reported earlier, in December 2019, the National Bank continued easing its monetary policy, cutting the key rate by 2 percentage points to a two-year low of 13.5% per annum. At the same time, the regulator reduced the rate for the fourth time in a row, after lowering it in October, September, and July.
Ukrainian Minister of Economic Development, Trade and Agriculture Tymofiy Mylovanov earlier said that the very strong hryvnia exchange rate affected domestic exporters, while the NBU's key policy rate was too high.