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interviewed by Interfax-Ukraine.
Will the NBU change the discount rate
“The slowdown in inflation to 5.1% by the end of 2023 provides quite a wide scope for easing the NBU’s monetary policy. But a number of risks voiced at the previous meeting of the monetary policy committee by its members do not give grounds to predict a reduction in the discount rate during the first meeting of the committee this year,” says Tatyana Popovich, director of capital markets at the state-owned Sense Bank.
According to her, although 2023 turned out to be quite successful from an economic point of view: a fivefold reduction in inflation, GDP growth of more than 5%, good indicators of food exports through the Ukrainian sea corridor, however, the security risks and the rhythm of the flow of international financial assistance remain quite high. .
“At lower levels they are transformed into increased devaluation and inflation expectations. At the end of last year, this mechanism eloquently demonstrated a record balance in the entire history of purchases and sales of foreign currency by the population,” Popovich noted.
Read: The NBU will announce a decision on the discount rate: how small banks prepared for this
She noted that although the demand for foreign currency weakened significantly at the beginning of this year, devaluation expectations still remain high; moreover, one of the negative factors is also expectations of accelerated inflation caused by the effect of a low comparison base.
“The NBU needs to maintain sufficient attractiveness of hryvnia savings instruments, and therefore the discount rate. As a result, I expect that during the first meeting of this year, the majority of members of the monetary committee will vote to keep the rate at 15% per annum. The corresponding decision will ultimately be made by the board,” concluded Popovich.
“Judging from practice, any sudden movements very rarely occur in January. I believe that no decision on rates will be made tomorrow. Moreover, it seems to me that even changes in the operational design of monetary policy should not be expected,” said the head of the board of Radabank Andrei Grigel.
He noted that taking into account the preliminary statements of the National Bank, there is room for reducing the discount rate exists in 2024.
“I believe that during the year the rate will most likely be reduced to about 13%. Most likely, this will be two reductions of 1% each,” the banker suggested.
The opinion of colleagues is shared by the Chairman of the Board of Altbank, Nadezhda Vorobyova.
“We expect that the National Bank will continue its policy of supporting attractiveness of the national currency and will leave the discount rate at the same level, as well as rates on monetary policy instruments,” she said.
Recall
53% of the Ministry of Finance readers who took part in our survey believe that the regulator will keep the rate at the current level.
According to experts from the Ministry of Finance, the rate will be reduced to 14% per annum, the yield on NBU overnight certificates of deposit will be up to 14% per annum, and 3-month certificates will be down to 18%. per annum.
