The National Bank of Ukraine (NBU) will leave the refinancing rate unchanged at 22%, aiming to stave off any adverse impacts that domestic political instability and global economic turbulence could have on the Ukrainian economy, the regulator said on March 3.
"The decision to keep interest rates unchanged is consistent with the NBU's objective of lowering headline inflation to 12% by the end of 2016 and 8% by the end of 2017," the central bank underlined in a statement. "In recent months, inflationary pressures have been dampened by the NBU's commitment to prudent monetary policy and subdued domestic demand."
According to official statistics, inflation in Ukraine reached 43.3 y/y in 2015, 24.9% y/y in 2014.
Sluggish economic growth, which will continue to weigh on consumer demand, is one of the key factors that will keep inflation firmly on a downward trend in 2016, the regulator believes. "Low global prices for energy and food are among other factors supporting the downward trend in inflation," the statement reads.
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