NBU considered the improvement of the situation with inflation, but the risks are left high rate

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The regulator points out that without the IMF loans, inflation will go up.

The national Bank of Ukraine notes to the gradual slowdown in the inflation rate in April was 13.1%. However, this is higher than the latest projections. So the regulator decided to leave discount rate at 17% per annum for another month and a half.

In NBU note that “monetary conditions are now quite hard to reduce inflation to the target figures in the medium term. In April-may 2018 inflation, as expected, the national Bank, continued to decline. So, last month, according to state statistics, headline inflation decelerated to 13.1% in annual terms. The deviation of this index from the last forecast of the National Bank was insignificant, caused the most volatile components and is likely to be offset in the following months. According to preliminary estimates of the National Bank, in may inflation will be significantly reduced, reflecting both the statistical effects of the comparison base, and a significant reduction in the cost of food.”

Core inflation in April remained unchanged at 9.4% in annual terms and is consistent with the forecast of the NBU.

“The most noticeable effect of the monetary policy manifested through the channel of the exchange rate of the hryvnia, contributing to its strengthening since the end of January this year. Also there has been some improvement in inflation expectations. Consumer inflation will continue to gradually decline according to the forecast of the National Bank, published in the Inflation report for April 2018. It will be 8.9% at the end of this year and will return to the target range in mid-2019. This would further contribute to monetary conditions, which today is already tough enough,” – noted in the NBU.

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Danyluk told about the terms and conditions of the next tranche of IMF loan

However, the predictions may not come true, and inflation will rise. This happens in the case of non-receipt of loans from the IMF and other international financial institutions.

“This forecast is relevant only if the realization of its core assumptions further progress in implementing structural reforms, in particular in the framework of increased funding of the International monetary Fund. These reforms are critical for preserving macro-financial stability and to ensure long-term economic growth in Ukraine. The near future will be decisive for decision-making, important to continue cooperation with the official creditors of Ukraine. The need for such cooperation in recent times has only increased given the complexity of developing countries ‘ access to global capital market. The value of debt borrowings of such countries is increasing amid the rise of the U.S. dollar, increased geopolitical tensions and risks of deployment of trade wars”, – said the NBU.

In the case of amplification of risks, the regulator will raise interest rates. The next meeting of the monetary policy scheduled for July 12.

What will be the salary, inflation and how to increase prices for communal read on Tsna in the consensus forecast to 2021.

NBU considered the improvement of the situation with inflation, but the risks are left high rate

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