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its own vision on who should be on the board. Notably, all the independent members of the board were appointed under the two previous prime ministers, and half of them were selected to the board under the previous president. If the board is replaced this would question the independence of its new members (and might raise discontent from Ukraine’s western partners), but it won’t affect the bank’s fundamentals.
Ukraine’s first purely online bank NEOBANK has launched in beta mode
in April to collect information before its general release slated for later this summer. Developed jointly by the fintech ecosystem Concord Fintech Solutions and the fintech company NЕО.РRО, NEOBANK is backed by the banking license belonging to ConcordBank. The bank intended as a digital bank targeting business and entrepreneurs with the possibility of remote opening of business accounts and easy online financial management. The official release of the application is planned for the summer of 2021 simultaneously on Android and iOS mobile platforms and in a responsive web version.
8.2 Central Bank policy rate
The National Bank of Ukraine (NBU) disclosed details of its April 14 decision to hike the key policy rate by 1.0pp to 7.5% in the minutes of its monetary policy committee meeting published on April 26. They revealed the decision was taken unanimously by all ten committee members.
The committee members noted that consumer inflation continued to accelerate faster than they expected. In March, annual consumer inflation reached 8.5% y/y, while January’s NBU forecast expected it at 7.6% y/y. On the one hand, the inflationary pressure was caused by temporary external factors (e.g. higher than expected global prices for energy resources and food). On the other hand, the fundamental inflation pressure was reinforced, as reflected by higher core inflation.
The committee members unanimously supported the decision to hike the key policy rate to 7.5% as a necessary action for curbing inflation and returning it to the 5% target in 1Q22. The key policy rate which exceeds the one in January’s forecast will be a clear signal to the market about the central bank’s intention to see inflation in the target range.
The NBU expects that the higher key policy rate will draw up the interbank interest rates and the interest rates for corporate deposits. The hike of interest rates for deposits of the population is expected by the middle of the year. This will partially redirect consumer demand to banking deposits and thus alleviate its pressure on inflation.
The majority of committee members believe that two recent consecutive hikes of the key policy rate will be sufficient for reaching the consumer inflation target in 1Q22. At the same time, some committee members noted that the inflation pressure might be underestimated due to high uncertainty, and that further hikes of the key policy rate might happen.
51 UKRAINE Country Report May 2021 www.intellinews.com