The National Bank of Ukraine (NBU) froze the rate at 10% at the start of the invasion, but signaled last week that it may start revising the rate as business activity partially recovered in safer parts of the country.
“The National Bank hopes that raising the discount rate to 25% will be enough to relieve pressure on the foreign exchange market and stabilize inflation expectations, which will ultimately create the preconditions for the transition to a cycle of discount rate reduction,” it said in a statement. The annual rate of change of the CPI in Ukraine in April 2022 it was 16.4%, 2.7 points higher than the previous month. The monthly variation of the CPI (Consumer Price Index) was 3.1%, so that the inflation accumulated in 2022 is 10.9%.
Inflation was already in double digits before the conflict began and rose to around 17% in May from 16.4% in April, according to NBU estimates. The central bank said inflation could double in 2022 from 10% in 2021.
“The purpose of this decisive step, along with other measures, is to protect hryvnia income and savings, increase the attractiveness of hryvnia assets, reduce foreign exchange market pressures and strengthen the National Bank’s ability to ensure the stability of the exchange rate and curb inflation during the war“, the central bank said in its statement.
The number of small businesses that suspended operations in April fell to 26% from 73% in March, according to a survey by the European Business Association, the business group that operates in Ukraine.
Source: Ambito
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