In June the discount rate was lowered to a record low of 6% and will remain so until the next review.
The national Bank for the first time since the beginning of the quarantine decided not to change interest rates, keeping it at the level of 6% from July 24. This was announced by the head of the NBU Kirill Shevchenko.
“On the one hand, it will restrain the growth of prices in conditions of economic recovery in 2021 or 2022, and with another — will leave sufficient space for further reduction in the cost of loans to odnosnikow level”, — said Shevchenko.
However, the Central Bank expects inflation to rise at the end of the year to 4.7%.
“In the second half of 2020 inflation will accelerate (up to 4.7% at the end of the year) is influenced by a number of factors both external and internal origin. First, it will be determined by loose monetary and fiscal policies that would weaken the negative effects COVID-19 and will support consumer demand and business activity. Secondly, the prices reflected the rise in energy and a worse harvest of fruits”, — stated in the message.
The Central Bank expects that in 2021-2022 year inflation will remain within the target range of 5.5% and 5% respectively.
We will remind, since June 12, the NBU reduced the discount rate from 8% to 6%, which is a record low pokazatelem.
Discount rate – the equivalent value of money in the economy. At this rate, the Bank provides funds to commercial banks who in turn lend to individuals and legal entities. Thus, the discount rate affects the cost of credit.
The rate increase shows the growth of inflation and falling economic growth in the country.