NBU increases refinancing rate to 16% from 14.5%

The National Bank of Ukraine (NBU) has decided to increase the refinancing rate from 14.5% to 16% from January 26, 2018.

According to a posting on the website of the central bank, decision No. 43-rsh on the size of the refinancing rate was approved by the NBU Board on January 25, 2018.

"The tougher monetary policy would help to gradually cut consumer inflation and returning of inflation to the targeted range in 2019," the NBU said, commenting on its decision.

If there were no significant signs of the decline in inflation pressure, the NBu could increase the refinancing rate more in the near future aiming to return inflation to the medium outlook targets.

Acting NBU Governor Yakiv Smoliy said at a briefing on Thursday that the increase of the refinancing rate to 16% would not stimulate banks to invest funds in short-term tools.

"At present, the government actively enters the market with offers to place long-term government domestic loan bonds. These tools are more attractive for banks compared with NBU deposit certificates," he said.

Deputy NBU Governor Dmytro Solohub said that the NBU does not rule out that the monetary policy would be relaxed if inflation factors weaken.