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state-owned bank to attain profitability.
Rada debate on a draft law to block former owners of Privatbank to reverse its nationalization has been moved from January to February, Kateryna Rozhkova, first deputy governor of the National Bank of Ukraine, told reporters on January 16.. Two Privatbank court cases delayed until late January presumably now will be delayed again.
8.2 ​Central Bank policy rate
The National Bank of Ukraine (NBU cut its key policy rate by 2.5 percentage points (pp) to 11% per annum after January 31.
The NBU continues to ease its monetary policy with the aim of maintaining inflation at the target level of 5% and supporting steady economic growth. In December, the NBU cut its key policy rate by two percentage points ​to 13.5% per annum from 15.5%​.
In 2019 consumer inflation declined to a six-year low of 4.1% (versus 9.8% in 2018). The NBU thus achieved its medium-term inflation target of 5% ± 1 pp (declared in 2015) earlier than expected. The strengthening of the hryvnia was the key factor driving the rapid disinflation seen in late 2019, offsetting the effects of robust consumer demand, the NBU said in the statement.
Throughout most of 2020, inflation will be below the 5±1 pp target range, but it will return to the target range at the end of the year, the central bank believes.
According to the NBU’s estimates, inflation continues to slow. It will be below the 5±1 pp target range starting in January and throughout most of the year. However, it will accelerate in Q4 to 4.8% at year-end 2020.
"This will be due to the following factors. First, last year’s appreciation of the hryvnia will continue to be reflected in prices of imported goods and products with a large share of imported inputs. Second, continued relatively low global energy prices will curb the rise in domestic fuel prices. Third, in the absence of supply shocks, food price inflation will be insignificant owing to expected higher yields of fruit and vegetables." At the same time, administered prices will grow somewhat faster than last year, mainly as excise taxes on tobacco products continue to converge with European levels. Driven by the monetary policy easing, inflation in 2021–2022 will remain within the medium-term target of 5+/-1% pp.
"The further steady, low pace of inflation will also be due to the following factors: a prudent fiscal policy; relatively low energy prices on the global markets; higher productivity of the Ukrainian economy," the statement reads.
The National Bank of Ukraine (NBU) slashed its key policy rate by two full percentage points (pp) to 13.5% on December 13 ​from​ ​previous level of 15.5%​, the regulator said in a statement on December 12.
The dramatic cut follows on from the previous large 150bp cut last month and has been made possible by the accelerating fall in inflation, which was down to 5.1% in November after starting the year at over 9%. However, thanks to the falling inflation rate even after the deep cut in interest rates this year Ukraine
44​ UKRAINE Country Report​ February 2020 ​ ​www.intellinews.com