Ukraine’s central bank lowers discount rate by 0.5pps to 6.5%.

By bne IntelliNews August 12, 2013

The National Bank of Ukraine has decided to cut the discount rate by 0.5pps to 6.5% as of August 13. The National Bank aims to keep pursuing the policy of improving performance of the national currency. The central bank expects the cut to lower the interest rates on loans and increase the availability of credit resources for improving the lives of citizens.

In addition, the lowering of the discount rate is planned to serve as a supporting factor for the implementation of the State Program for Enhancing Economic Growth in 2013-2014, on the implementation of which the government and the National Bank of Ukraine are currently working.

According to Capital Times Managing Partner Eric Naiman, there is no direct impact of the discount rate on deposit and credit programs in Ukraine. This is the consequence of the NBU tough policy, which justly fears the cheap hryvnia appearance on the currency market and, respectively, its destabilization.

Moreover, reduction of the discount rate to 6.5% should cut the average rate on credits for legal persons to 16.5-17%. At the same time, not only rates will be cut on credits, but on deposits in large banks, believes, President of the Ukrainian Analytical Center Oleksandr Okhrimenko.

The NBU last lowered its discount rate on June 10, 2013 - by 0.5pps to 7%. Until then, it kept the discount rate at 7.5% from March 23, 2012, when it was cut from 7.75%.

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