The NBU slashes prime rate by 200 bps down to 13.5%

UKRAINE - In Brief 12 Dec 2019 by Dmytro Boyarchuk
The NBU Board decided to cut prime rate by 200 basic points down to 13.5% from December 13, according to the NBU press-release. Sharp consumer inflation slowdown to +5.1% y/y in November as well as positive news about staff-level agreement with the IMF are behind the decision. More rate cuts are promised next year. The NBU talks about 8% prime rate by the end of 2020. Economic fundamentals remain strong. What’s more, we see President Zelenskiy handling well his political challenges. More clarity is needed on his relations with Kolomoyskiy. Everyone is awaiting for the Court of Appeal decision on Dec 19 on Privatbank nationalization. Observers treat it as a crucial event though the case, apparently, will be also reviewed by the Supreme Court. Despite the rate cut was quite steep this time, the NBU is still harshly criticized. The Head of the NBU Council claimed the decision was already overdue and now even stronger rate decline is badly needed. Next meeting of the Board will be on January 30. Unless some dramatic event happens, we should expect next rate cut promptly at the start of the next year.

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