NBU’s Monetary Policy Committee supports moderate increase in key policy rate to 6.5%–7%

This issue was discussed during a meeting of the NBU’s Monetary Policy Committee, the central bank's press service reports.

During the discussion, most MPC members have said that an increase in the key policy rate in 2021 is inevitable.

“Over the next few months, the key policy rate needs to be raised moderately, to 6.5%–7%, most MPC members suggested. This should help ease underlying inflationary pressures and improve inflation expectations, thus gradually slowing inflation and returning it to the 5% ± 1 pp target range in early 2022,” reads the report.

At the same time, several MPC members said that an increase in the key policy rate would not be necessary, “given that the pro-inflationary factors are temporary and that there are likely to be offsetting factors, including foreign capital inflows”.

“The latter will be sufficiently powerful and will actually enable the NBU to slightly cut the key policy rate to a new all-time low,” an MPC member said. 

As reported by Ukrinform, on January 21, 2021, the NBU decided to remain the key policy rate unchanged at the level of 6%.

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