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Sunday, January 21, 2018

NBU modifies, tightens monetary policy framework

The National Bank of Ukraine (NBU) said on Thursday that it has modified the operational framework of monetary policy to improve efficiency and transparency.

The changes include eliminating foreign currency auctions. Instead, the NBU, in collaboration with the banking sector, will set the exchange rate of the national currency based on international market supply and demand. The bank has changed the role of discount rates, making them more significant, as benchmark monetary policy rates.

Interest rates on liquidity adjustment instruments will be set in line with the discount rate. This move is expected to eliminate uncertainty and allow price-setting mechanisms to be more efficient in regard to lending resources.

These moves tighten the NBU's authority on monetary policy, allowing the country's macroeconomic climate to gain stability. To this end, the bank has increased its base rate to 19.5 percent, asserting that increases are unlikely to have a significant negative impact on the business climate in Ukraine.

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National Bank of Ukraine

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