The national Bank said how to tame inflation


 Нацбанк уточнил, каким образом будет укрощать инфляцию

To ensure that monetary policy applies a medium-term concept of the equilibrium interest rate, which is defined as a short-term risk-free real interest rate, corresponding to GDP at the potential level and inflation at the target level after the exhaustion of the effects of all cyclical shocks.

Increasing the transparency of monetary policy, the national Bank of Ukraine said operational target of its interest rate policy.

Interest rate policy the National Bank is the regulation of the National Bank of the supply and demand for money through changes in interest rates on its operations with the purpose of influencing the interest rates of the subjects of the monetary market and the profitability of financial operations.

Changing the account (key) rate, the national Bank influences short-term interest rates in the interbank monetary market, which, for its part translated to changes in interest rates on other financial assets (particularly government securities) and changes in the interest rates of banks on credits and deposits. These rates have a direct impact on the consumption and investment of households, enterprises, and consequently on inflation.

Increasing the transparency of monetary policy, the national Bank of Ukraine said operational target of its interest rate policy.

Operational goal of monetary policy the National Bank is the maintenance of national currency interbank rates at a level close to the level of interest rates within a corridor of interest rates on instruments of a permanent access. Indicator of the level of hryvnia interbank interest rates for the purposes of interest rate policy determined by the Ukrainian index of rates for interbank loans and overnight deposits in national currency unit (UIIR).

That is, if the reduction of inflation to 5% in the medium term is a goal of monetary policy, the purpose of monetary operations is to keep the value of UIIR at a level close to the level of the discount rate (now 18%) and within the corridor of interest rates on instruments of a permanent access, i.e., on overnight loans (currently 20%) and in certificates of Deposit overnight (now 16%).

The national Bank chose this index UIIR as a reference point, since its calculation is carried out according to clear rules on a daily basis on the basis of actual transactions of commercial banks. The reliability of the calculations on its part confirmed by the National Bank that administers index UIIR and broadcasts it on the official website.

The relevant additions for operating purposes interest rate policy approved by Resolution of Board of National Bank of Ukraine from 5 November 2018 №117 “About modification of Position about the basics of interest rate policy of the National Bank of Ukraine”.

Recall that further decisions on the establishment of the policy rate unchanged at 18.0% APR was adopted by the Board of the National Bank of Ukraine at the meeting of the monetary policy October 25, 2018.

Share