The National Bank of Ukraine (NBU) will again keep the discount rate at 25% at its December 8 meeting, most bankers surveyed by Interfax-Ukraine on Wednesday forecast.
“I am confident that the National Bank will decide on December 8 to keep the discount rate at the current level of 25%, as there is no reason either to raise or to lower it. Following October’s results, inflation accelerated somewhat, but remains within the NBU’s forecasted trajectory. In any case, the level of the discount rate has no direct impact on the inflation processes at the moment,” Ivan Svitek, chairman of the board at Unex Bank, said.
According to him, the increase in consumer prices is mainly provoked by logistical constraints and the destruction of production facilities. Consequently, a further increase in the discount rate will not be able to significantly affect inflation.
“On the other hand, the NBU is also unlikely to lower the rate in the current environment. The monetary transmission effect, which the regulator was counting on by raising the rate to the current level, has not been exhausted yet,” he added.
Svitek noted that the increase in interest rates on deposits of individuals continues and somewhat accelerated in December due to the revision of the profitability of deposits by major players, but now to achieve the goal set by the regulator does not make sense to reduce the discount rate this month.
Konstantin Khvedchuk, strategic development analyst at Pivdennyi Bank, also predicts that the discount rate will remain at 25%.
“While inflation continues to approach 30% y/y and inflation expectations are kept high, it is necessary for the NBU to ensure a comparable value of hryvnia resources in the economy. Therefore, decisions will be made to accelerate a preliminary change of the discount rate to market rates, for example, increase of reserve requirements or issue of term deposit certificates,” he said.
His opinion is shared by Alexey Blinov, head of Sense Bank’s analytical department, who also expects the discount rate to remain at the current level.
Nikolay Voytkiv, director of the Risk Management Department of Accordbank, made the same forecast.
“We do not expect changes in the discount rate, as there were no significant changes in the macro environment over the past month. There is stabilization in the exchange rate, while inflation expectations remain high,” he pointed out.
He added that at the same time, the regulator is likely to reduce the interest rates on certificates of deposit (currently 23% per annum) and their maturity in order to encourage banks to invest in OVDPs.
“The discount rate will remain unchanged in the medium term. Firstly, there are no prerequisites for its revision, as the inflation rate remains high. Second, the NBU has given a guideline that it will not revise it until the first quarter of 2024,” OTP Bank head Volodymyr Mudryy pointed out.
Oksana Shveda, deputy chairman of Credit Dnipro bank, reminded that the Monetary Committee’s tasks include not only the discount rate, but also decisions regarding stimulation of monetary instruments to reach the target. Therefore, according to her, there is a possibility that the NBU will announce decisions on the mandatory reserve requirement rate, which will include current or term accounts in all currencies, at the meeting on 8 December.
