NBU leaves refinancing rate unchanged

"The NBU Board's decision to keep a prudent monetary policy in place aims to stave off any adverse impacts that domestic political instability and global economic turbulence could have on the Ukrainian economy. The decision to keep interest rates unchanged is consistent with the NBU's objective of lowering headline inflation to 12% by the end of 2016 and 8% by the end of 2017," a statement reads.

It is reported that headline inflation in January 2016 stood at 0.9% m-o-m and was broadly in line with the NBU's inflation projections for the month. January's price developments were consistent with the projected disinflation path, envisaging moderation of headline annual inflation to 12% by the end of 2016. Core inflation continued to moderate, standing at zero in January, according to the report.

The heightened exchange rate volatility observed in January-February 2016 had a relatively limited impact on the inflation rate. Thanks to the measures taken by the NBU to smooth excessive exchange rate volatility, the hryvnia depreciated in a gradual manner, thus having a limited impact on the inflation rate, the regulator said.

As UNIAN reported earlier, on March 4, 2015 the NBU raised its refinancing rate to the historic maximum level for the Ukrainian banking system — 30% from 19.5% per annum that was effective previously.

On August 28, the NBU cut its refinancing rate to 27%, and on September 25, it was reduced to 22% per annum. The regulator said further reduction was possible provided the maintaining of the market stability.