NBU may ease monetary policy by late 2015

6.08.2015 р., 13:40

"If inflation expectations remain well anchored, inflation subsides in line with program projections, and the foreign exchange market stability continues, the monetary policy stance could be eased later in the year to support economic activity," reads the updated memorandum of economic and financial policies of Ukrainian authorities to the International Monetary Fund (IMF), posted on the NBU's website. "For the time being, the current monetary policy stance remains appropriate given our near-term inflation projections and current inflation expectations (15–20% for the year to June 2016). Keeping the policy interest rate positive in real terms on a near-term forward-looking basis is essential to achieving our operational NIR (net international reserves)/NDA (net domestic assets) targets through open market operations and anchoring inflation expectations. The NBU will monitor closely incoming data to ensure that inflation decelerates as projected and second-round effects from the exchange rate depreciation and energy price hikes remain contained. If inflation expectations are well anchored, inflation is under control, and foreign exchange market stability is entrenched, we will consider easing the monetary policy stance later in 2015 to support economic activity. Conversely, if despite our expectations inflation repeatedly surprises on the upside, or strong exchange rate depreciation pressures return, we will tighten policy as needed to address these adverse developments," reads the document.

NBU may ease monetary policy by late 2015