According to the basic scenario, in response to the growth of inflation risks and slowing down of the process of improvement of inflation expectations, the National Bank of Ukraine had to more moderately ease the monetary policy in 2017, according to Finance.UA.
As noted in the regulator’s inflation report of, the monetary conditions will remain relatively stringent in order to ensure further decline in inflation in accordance with approved inflation targets: 8% ± 2 p.p. as of late 2017 and 6% ± 2 p.p. as of late 2018.
As reported, the National Bank increased the inflation forecast for 2017 from 8% to 9.1% and kept at 6% for 2018, explaining it by effects of the double increase of the minimum wage from January 1, 2017.
Meanwhile, the National Bank forecasts the gradual acceleration of economic growth in 2017-2018 up to 2.8% and 3% respectively through the emerging role of private consumption after increasing the minimum wage. On January 26, NBU decided to keep the bank rate at the previous level – 14% per annum. The regulator took the same decision at the last session in 2016, on December 8, after which it decreased the rate for six months in a row.
The maximum historic value of the NBU rate at 30% per annum was effective during March 4 and August 28, 2015. The inflation in Ukraine in 2016 (December 2016 to December 2015) decreased to 12.4% from 43.3% in 2015, reaching its minimum for the last two years and remaining at the level of the NBU’s annual inflation target at 12% ± 3 p.p.
