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Ukraine’s central bank left its benchmark interest rate unchanged for a second meeting, citing the risk that consumer-price growth will continue to quicken after inflation surprised economists last month, according to Bloomberg.
The discount rate will stay at 22%, the National Bank of Ukraine said Thursday in a statement, Bloomberg reported.
Policy makers lowered it in August and September, bringing borrowing costs down from as high as 30%. Governor Valeriya Gontareva will speak to reporters in the Ukrainian capital Thursday on the bank’s decision.
“The decision is based on the possibility of having to ease the negative impact of domestic and external factors on prices, and to help slow inflation to 12% by the end of 2016,” the central bank said in the statement.
Read alsoNBU boasts 75% increase of intl reservesUkraine’s inflation rate soared as political and military conflicts sent the national currency tumbling and prompted the government to raise utility prices to narrow the budget shortfall and meet the requirements of a $17.5 billion International Monetary Fund bailout. The next installment from the Washington-based lender is on hold until Ukraine approves a new tax code and the 2016 budget, issues that have opened rifts within the ruling pro-European coalition.
Consumer-price growth jumped to 46.6% in November from 46.4% the previous month. Prime Minister Arseniy Yatsenyuk said last week that Ukraine’s main task in 2016 will be to tackle inflation.
The central bank, which pledged to lower interest rates significantly if inflation subsides next year, said December 1 that the foreign-exchange market had stabilized after the hryvnia lost almost 12% against the dollar in October and November. The hold-up of Ukraine’s next $1.7 billion bailout tranche, initially expected in October, as well as $2.3 billion of aid linked to IMF cooperation, prompted the bank to cut its forecast for foreign reserves to $13 billion from $18 billion.