Ukraine sharply raised its benchmark interest rate on Thursday from 10% to 25%, tightening monetary policy for the first time since the Russian invasion to fight double-digit inflation and protect income and savings from the country. population during the war.
The invasion has devastated the Ukrainian economy, which could shrink by at least a third this year as the war forced 40% of businesses to close, destroyed infrastructure, blocked transport routes and reduced cities to rubble.
The National Bank of Ukraine had frozen its benchmark interest rate at 10% at the start of the invasion, but it signaled last week that it might start reviewing borrowing costs as business activity has partially recovered in safer parts of the country.
“The National Bank hopes that raising the discount rate to 25% will be enough to relieve pressure on the foreign exchange market and stabilize inflation expectations, which in the long term will create the conditions for the transition to a rate reduction cycle” , the central bank said in a statement.
Source: CNN Brasil
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