The Board of the National Bank of Ukraine approved the main principles of monetary policy for the year 2020 and medium term, said the head of the Council Bohdan Danylyshyn. About this he wrote in Facebook.
“In 2020, the national Bank will use the flexibility of the inflation targeting regime, contributing not only to the return of inflation to the target, but also worrying about the impact of monetary decisions on economic growth,” he said.
Danylyshyn also said that the aim of the NBU is to maintain inflation in the medium term at 5% with an allowable range of deviations of 1 percentage point in either direction.
The national Bank will continue to adhere to a floating exchange rate, use the flexibility of the inflation targeting regime, which will allow to ease monetary policy, contributing to economic growth, the document says.
Thanks to this policy of the national Bank, the discount rate in real terms will gradually decline in subsequent years, to neutral, and given the improvement in inflation expectations will fall and nominal interest rates of banks.
In some periods, inflation can deviate from the set goal because of the influence of factors outside the influence of monetary policy of the national Bank.
“In the case of implementation risks, which will strengthen the fundamental inflationary pressure and worsening expectations of economic agents, the regulator will use all available means and methods of monetary policy to return inflation to the target at the policy horizon,” reads the document.
NBU will seek to improve interaction with the government, coordinating monetary, fiscal and debt policies, which will be exclusively subject to the principle of the independence of the latter.
According to the accepted principles of monetary policy for the year 2020, the national Bank will continue to avoid all forms of fiscal dominance over monetary policy, including direct or indirect support budget expenditures.
In defined legal term, the basic principles will be sent to the Verkhovna Rada with the aim of informing.