The national Bank lowered the discount rate. What this means
The national Bank lowered the discount rate. What this means
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The figure of 14% will be effective from October 28.
Today, 28 October, the national Bank of Ukraine decreased by 1% the discount rate from 15% to 14%.
“Further monetary policy easing due to risks to price stability and consistent with the need to achieve inflation target in 2017-2018,” – said the NBU.
The discount rate is the interest rate at which the NBU provides loans to commercial banks. With low interest rate and fast oslablenie of the hryvnia, the banks have a winning strategy: they can borrow money in the NBU, translate them into foreign currency and by the depreciation of the hryvnia to the income that covers the bet. But high discount rate makes such operations more risky.
Note that government forecasts for 2017 laid down the dollar to 27.2 UAH. Today’s official exchange rate the NBU is loss of 25.53 USD per dollar.
The implications of changing the discount rate on the economy, the loans and the wallets of Ukrainians read more at TsNII this link.