NBU not ruling out further lowering of discount rate

"If consumer demand in Ukraine does not resume quickly, the National Bank may lower the discount rate below the neutral level. If consumer demand resumes immediately after the quarantine is lifted and inflation accelerates, the National Bank will have to move to a more restrained policy," the press service of the central bank wrote on Facebook.

The National Bank notes that Ukrainian banks need more time to adapt to low rates. Banks are cautious about lowering deposit rates because of the certain outflow of cash from the banking system at the beginning of the coronavirus crisis and possible recurrence of the pandemic. In addition, the credit risk premium grows during the crisis.

As Ukrinform reported, the National Bank decided to reduce the discount rate from 8% to 6% from June 12, 2020.

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