The National Bank of Ukraine increased the discount rate to 16 percent

The National Bank of Ukraine (NBU) raised the discount rate by 0.5 percentage points for the second time in a row. The indicator in the first half of the year was at the level of 15 percent, at the end of July it was increased to 15.5 percent, and now has reached 16 percent per annum, according to materials published by the regulator’s press service.

Such a step will support the attractiveness of hryvnia assets and the stability of the foreign exchange market, the NBU noted, adding that the decision was made taking into account fundamental price pressure, secondary effects from supply shocks and increased medium-term pro-inflationary risks.

In August, annual inflation accelerated to 8.1 percent, and the National Bank seeks to return it to the target 5 percent. Its trajectory is expected to be slightly higher than previously thought. The NBU attributes this, among other things, to the fact that average wages in July and August continued to grow at a high rate, supporting fundamental price pressure.

Among the factors that are likely to limit price increases, the Ukrainian Central Bank named a significant supply of food on the domestic market, caused by difficulties with exporting crops through the Black Sea ports.