Page 12 - UKRRptFeb19

Monetary policy rates too high
However, this low inflation has come at the price of keeping interest rates high in many countries, which is clear from the second heatmap and shows the region is still a two track tale.
In general the economies of central and southeastern Europe have also managed to keep central bank monetary policy rates low, whereas in Eastern Europe and Central Asia the fight against inflation is clearly still in full swing as central banks in those regions have been to keep the cost of borrowing high.
Again Turkey and Iran stand out in the heatmap as having very high rates as they deal with the aftershocks from their crises, but Ukraine is also in the red and rates rose somewhat from 16% to 18% over 2018 as the NBU struggled to control strong inflationary pressures.
In almost all of the other countries the trend was of falling rates, or in a few cases the upward adjustments were minor, except Russia, which started 2018 with another rate cut in a series of constant cuts over the last four years. However, the easing cycle in Russia came to an end in September when the Central Bank of Russia (CBR) unexpectedly hike rates in a preemptive move that anticipates new “crushing” sanctions from the US in 2019. That will hurt Russia’s growth story, but the state is more concerned with defending itself from external shocks at the moment than it is with leveraging its otherwise strong macro position to boost growth.
12 UKRAINE Country Report February 2019 www.intellinews.com