The Board of the National Bank of Ukraine (NBU) decided on Thursday to raise the discount rate to 14.5% per annum starting January 24, in response to inflation rising to 12% by the end of 2024. This increase slightly exceeds market participants' expectations.
"The Board of the National Bank of Ukraine has decided to raise the discount rate to 14.5% per annum. This decision aims to maintain the stability of the currency market, keep inflation expectations under control, reverse the inflation trend, and gradually slow down inflation to the target of 5%," the regulator stated in a press release on its website.
The NBU acknowledges that containing price pressure will require further tightening of monetary policy. Specifically, according to the release, the updated macroeconomic forecast of the central bank anticipates further increases in the discount rate to curb inflation.
"The NBU is likely to continue tightening monetary policy at upcoming Board meetings on monetary policy if signs of persistent inflationary pressure and threats to the balance of inflation expectations remain," it indicates.
Consequently, following the discount rate increase, the rates for overnight deposit certificates have been raised to 14.5%, three-month deposit certificates to 17%, and refinancing loans to 17.5%.
As previously reported, the October forecast for the dynamics of the discount rate anticipated it being maintained at 13% per annum during the first half of 2025, with a further decrease of 0.4 percentage points in both the third and fourth quarters, resulting in a year-end rate of 12.2% per annum.