The NBU favors reducing the key policy rate to 18% by the end of the year.

Nine out of 11 NBU Monetary Policy Committee members spoke in favor of lowering the discount rate to 20% in September. The majority of committee members decided that a moderate 2% discount rate reduction would not threaten the attractiveness of hryvnia savings and, thus, exchange rate stability.

At the same time, this step would support economic recovery. In addition, a gradual rate reduction helps maintain OVDP investors’ interest. This, among other things, strengthens the government’s ability to attract funds on the domestic debt market and minimize the threat of resuming budgetary emission financing in the event of additional spending to maintain defensive capability.

At the same time, all members of the committee predict a further decrease in the discount rate if inflation is steadily decreasing and the stability of the foreign exchange market is maintained over the forecast horizon. Most experts expect the discount rate to drop to 18% by the end of the year, and several members even predict 16-17%.