The National Bank of Ukraine has cut its discount rate from 16% to 15%. The decision will take effect on December 15, the NBU press service reports.

At the same time, the rates on deposit certificates and refinancing loans for banks have been cut by 1 percentage point (to 19% and 21%). The difference between them and the key rate is due to the fact that the NBU is trying to prevent a decline in deposit rates. Also, the key policy rate cut should not shake the stability of the foreign exchange market.

This is the fourth time the NBU has cut the key policy rate in 2023. The first time it happened at the end of July (from 25 to 22%), then in September (to 20%) and at the end of October (to 16% with the difference set at the same level as other rates).

It is noted that the following trends were taken into account during the adoption of the current decision:

• successful adaptation of the foreign exchange market to the new exchange rate regime;
• further decline in inflation and improvement in inflation expectations;
• continued attractiveness of hryvnia savings.

"The foreign exchange market remained stable after the transition to the managed exchange rate flexibility regime. The NBU daily compensates for the structural deficit of foreign currency, and the exchange rate fluctuates in both directions under the influence of changes in the balance of supply and demand. The level of international reserves is sufficient to maintain exchange rate stability," the NBU said.

In addition, the key policy rate cut will not lead to a sharp decline in deposit interest rates. It "does not pose a risk to the attractiveness of savings in hryvnia given the decline in inflation and improvement in inflation expectations," the NBU explained.

"In the future, the NBU is ready to flexibly adapt its interest rate policy in view of changes in the balance of risks to exchange rate stability and inflation," the NBU announced.