Experts predict a rate increase to 9.5% — 10%.
On January 20, the National Bank will revise the discount rate for the first time. Therefore, the journalists decided to ask the experts whether the regulator will continue the rate increase cycle that took place last year, reports the Chronicle.info with reference to Channel 24.
What will be the discount rate
Among the main reasons for raising the discount rate, experts named inflationary risks and geopolitical tensions. In particular, we are talking about the escalation of Russian aggression, which created risks in the foreign exchange market and the debt capital market. So experts predict a rate hike to 9.5% — 10%.
Taking into account the above factors Vitaliy Vavryschuk, Head of the Group's Macroeconomic Research Department ICU believes that the National Bank will raise the rate by 0.5 percentage points to 9.5%.
These new risk factors, which emerged last week, are likely to prompt the NBU to raise the discount rate to 9.5%.
Vitaliy Vavryshchuk, Head of Macroeconomic Research, ICU Group
Remember! December 9, the NBU increased the discount rate to 9%. Then the deputy head of the NBU, Serhiy Nikolaychuk, noted that such a decision was aimed at leveling the impact of additional pro-inflationary risks, improving inflationary expectations and ensuring a steady decline in inflation to 5%.
Chairman of the Board of Unex Bank Ivan Svitek also has little doubt that the discount rate will be increased on Thursday. He thinks it's just a matter of how many percentage points.
I think some members of the Monetary Committee will be in favor of a 0.5% increase. And some will speak out for a more radical change and setting the indicator at the level of 10%.
Ivan Svitek, Chairman of the Board of Unex Bank
Why we should expect a rate increase
- Inflation risks
Ivan Svitek recalled that back in December, during the last meeting, the majority of committee members expressed their readiness for a further increase in the rate, given the high inflationary risks. It is noteworthy that since then they have not decreased.
First of all, it should be noted that at the end of the year, the price growth rate turned out to be somewhat higher than expected by the NBU. Yes, inflation is slowing down, and that's a very good thing. However, not as fast as predicted,
— he stressed.
The chairman of the board also noted that the reasons that force the regulator to raise the rate are mainly outside the zone of influence of the NBU — global factors exert significant pressure on prices. However, he believes that the regulator should respond and take steps to curb inflation. «Especially now, when similar steps are expected from the FRS and the ECB, which can no longer call inflation a temporary phenomenon», Svitik adds.
The situation with inflation in Ukraine
In December 2021, the inflation rate in the country slowed to 10% per annum according to the State Statistics Service against 10.3% in November. Please note that the NBU predicted that by the end of 2021, the inflation rate in Ukraine would be about 10% per annum. However, this forecast was far from the regulator's medium-term target of 5±1%.
Recall that it was precisely because of inflationary pressure that the regulator raised the discount rate during the past year. On March 4, the NBU raised the rate by 0.5% to 6.5% for the first time since April 2014. In April, inflation fell by 0.1% to 8.4%.
What is inflation
Inflation is a prolonged increase in the general price level, reflecting a decrease in the purchasing power of the monetary unit.
- < li>Geopolitical tensions and pressure on the hryvnia
Svitek believes that geopolitical tensions directly increase inflationary risks. Moreover, the sale of Ukrainian assets puts significant pressure on the hryvnia, which also increases inflationary risks in the medium term and is another factor that makes a decision in favor of a rate hike more likely.
In my opinion, the majority of the members of the Monetary Committee will vote for a moderate increase in the discount rate to 9.5% and express their readiness for further growth of the rate in March,
he summarizes.
Pay attention!A change in the discount rate is an important signal for banks to determine interest rates on deposits and loans. The higher the key rate, the more expensive loans and deposits in national currency.