By CentralBankNews.info
The central bank of Ukraine held its benchmark discount rate steady at 30.0 percent to “consolidate the positive developments in the money market and support the trend to lower inflation,” reiterating the reasoning it also used in its June policy statement.
The National Bank of Ukraine (NBU) added that it expects a further slowdown in inflation as long as the current balance in the money market continues, setting up the conditions for a sustainable reduction in inflation risks and thus monetary easing.
The NBU raised its rate by 1,600 basis points this year, most recently by 1,050 points in March, and by a total of 2,350 points since April 2014 to protect the value of the hryvnia and curb inflation.
At today’s meeting, the NBU board noted the gradual decrease in inflationary pressures and discussed possible changes in monetary instruments. It did not comment further on what those changes might be.
Ukraine’s inflation rate eased to 57.5 percent in June from 58.4 percent in May and 60.9 percent in April, the highest rate seen since hyperinflation in the mid-1990s when it hit an all-time high of 530.3 percent in September 1995.
On the interbank and cash segments of the foreign exchange market in July, the central bank said demand for foreign currency was lower than supply, helping fluctuations in the exchange rate against the U.S. dollar stay in a “fairly narrow range.”
The hryvnia depreciated by almost 50 percent against the U.S. dollar last year following the outbreak of armed conflict in Eastern Ukraine and the occupation of the Crimean peninsula by pro-Russian forces.
But following a cease-fire agreement in late February, rate hikes and administrative measures, the hryvnia has bounced back and stabilized. Today it was trading at 21 to the dollar, down 25 percent this year after hitting a low of 33.7 in late February.
The National Bank of Ukraine issued the following statement (translation by Google):