NBU cuts refinancing rate to 13%

The board of the National Bank of Ukraine (NBU) has decided to reduce the refinancing rate from April 14, 2017 to 13% per annum from 14% per annum introduced on October 28, 2016.

"The restoration of the mitigation of the monetary policy is in line with the necessity of achieving inflation targets in 2017-2019 and would support the pace of economic growth," the central bank said on Thursday.

The NBU said that consumer inflation in March 2017 was 15.1% in annual terms. Growth of prices accelerated mainly due to the effect of the comparison base and the increase of production expenses.

The regulator said that the acceleration of consumer inflation was expected that it was lower than the NBU's forecast published in the inflation report in January 2017, when the NBU expected that annual inflation would accelerate in March to 16.4%.

The central bank said that the fundamental factors of inflation remained under control. Moderate fiscal and monetary policies and improvement of inflation expectations hindered the underlying inflation – 6.3% in annual terms in March 2017.

"The pressure on prices by consumer demand was moderate. The low pace of growth of retail goods turnover in the first months of the year is evidence of this," NBU Governor Valeriya Gontareva said at a press conference on Thursday.

The NBU said that demand on labor is restoring thanks stirring up economic activity and improving business expectations of companies. Misbalance on the labor market was the reason of unemployment in the country.

"The situation on the currency market helped to weaken the pressure on prices. The situation on the global market for Ukrainian exporters since early 2017 has improved thanks to growth of prices of steel, iron ore and grain," the NBU said.