The majority of the members of the Monetary Policy Committee of the National Bank of Ukraine see the possibility of lowering the key policy rate by 1-2 percentage points in 2024.
According to the information provided by the National Bank, following a committee discussion, all 11 members voted in favor of reducing the key policy rate from 16% to 15% annually.
However, some committee members believe that despite the possibilities, it is advisable to maintain the rate at its current level.
Nevertheless, the majority is confident that if the macroeconomic situation develops close to the baseline scenario and the realization of key negative risks can be avoided, the NBU will be able to continue the cycle of monetary policy easing.
"An important precondition for this is, in particular, the restoration of the regularity of external aid inflows," the regulator reported, reflecting the majority opinion of the committee members.
At the same time, the committee members agreed that in times of war, the National Bank should act cautiously to avoid undermining macrofinancial stability. In particular, the regulator is obligated to maintain the attractiveness of hryvnia instruments and assets for savings to ensure exchange rate stability and moderate inflation.
"In view of this, the room for further reduction of the key policy rate is limited. Several participants in the discussion noted that this is a maximum of 1-2 percentage points during 2024. Instead, according to several other members of the MPC, maintaining the key policy rate unchanged throughout the next year would be appropriate," the release stated, summarizing the committee's discussion.
