The National Bank of Ukraine (NBU) expressed concern that some Ukrainian banks are artificially lowering interest rates on deposits for the population, ignoring the regulator's actions aimed at increasing them. Banks are taking advantage of their monopoly position in the market. This was reported by the NBU press service, citing the results of the meeting of the Monetary Policy Committee held on March 5.
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Insufficient impact of interest rate hike: reasons
During the meeting, the decision to increase the key rate to 15.5% was supported. Several members of the MPC noted that preliminary increases in the key rate had not had a sufficient impact on the level of deposit rates in banks, so additional measures were needed.
Although the actions of the NBU have stopped the reduction of interest rates on bank deposits, their growth is being held back by several factors:
- Significant excess liquidity in the banking system. High level of uncertainty in the economy. Significant market concentration: dominance of a few large banks.
Monopoly advantages of individual banks
“Some banks continue to use their non-competitive advantages related to the concentration of excess liquidity, in particular due to the uneven distribution of significant social payments and military salaries. These banks refrain from revising their interest rate policy, ignoring the relevant steps of the NBU. This leads to an extremely slow increase in the level of deposits.”
Calibration of interest rate policy: stimulating competition for depositors
In this regard, the majority of the members of the CMP spoke in favor of adjusting the operational design of the NBU interest rate policy. The goal is to create additional incentives for banks so that they compete more actively to attract depositors' funds and increase the volume of urgent hryvnia deposits of the population.
Expected consequences: reduced pressure on the currency market and inflation
“It is expected that as a result, part of the demand will be reoriented to consumption and purchase of foreign currency for hryvnia savings. This will help reduce pressure on the foreign exchange market, preserve international reserves and slow inflation more sustainably,” the NBU notes.
Increase in the discount rate and rates on deposit certificates
Let us recall that from March 7, 2025, the NBU raised the key rate from 14.5% to 15.5% per annum. In addition, since April, the NBU has increased by 3.5 percentage points the rates on deposit certificates used by banks to place household funds in the National Bank.
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- NBU Deposit