The NBU is considering raising the discount rate to fight inflation

The National Bank of Ukraine does not rule out the possibility of raising the discount rate in the future, while it believes that the current level of 13% is sufficient to contain inflation and achieve the goal of 5% in the coming years. This position was voiced by the press service of the NBU, noting that this issue was discussed in detail during a meeting of the Monetary Policy Committee (MoP).

During the October meeting of the KMP, nine out of ten committee members supported the decision to leave the discount rate at the level of 13%. They emphasized that such a rate, along with ensuring the stability of the foreign exchange market, is sufficient to control inflationary processes. At the same time, the participants of the discussion noted that this step is consistent and predictable, given the previous messages of the NBU regarding monetary policy.

However, one of the committee members spoke in support of raising the discount rate to 13.5% in October. He argued this with additional evidence, including faster-than-expected inflation growth, worsening expectations and an upward shift in inflation risks. In his opinion, such a step would help the NBU to demonstrate its readiness to ensure price stability and protection of hryvnia savings not only in the short term, but also in the long term.

Despite this opinion, the majority of KMP participants believe that the discount rate at the level of 13% will remain optimal for the next few months. At the same time, even if the current rate level is maintained, none of the participants excludes the possibility of raising it if the market situation requires it.

In addition, none of the committee members sees the need to ease the interest rate policy in the near future. Eight out of ten meeting participants believe that the current rate of 13% is sufficient to protect hryvnia savings from inflation, but two forecast that the discount rate should be increased to 14% in December.

In general, the growth in demand for hryvnia term deposits and bonds of the domestic government loan (OVDP) in the fall indicates the effectiveness of the chosen monetary policy. Maintaining stable inflation expectations gives the NBU grounds to claim that its task of protecting savings against inflation is being successfully fulfilled.