The National Bank of Ukraine lowered its benchmark interest rate by 50 bps to 17 percent on July 18th of 2019, surprising markets who expected a 25bps reduction. It was the second rate cut this year, bringing borrowing costs to its lowest since June of 2018 and in line with reaching inflation target of 5%. In June, annual inflation declined to 9.0 percent from 9.6 percent in May, in line with central bank estimates. Policymakers expect inflation to fall 6.3 percent by the end of 2019 and 5.0 percent by the end of 2020. Also, the National Bank raised its forecast for economic growth in 2019 (from 2.5 percent to 3.0 percent) and 2020 (from 2.9 percent to 3.2 percent), amid more stable domestic demand. The Board expects a further reduction of the interest rate to 8 percent over the next years. Interest Rate in Ukraine averaged 38.64 percent from 1992 until 2019, reaching an all time high of 300 percent in October of 1994 and a record low of 6.50 percent in August of 2013.
Interest Rate in Ukraine is expected to be 16.50 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in Ukraine to stand at 13.50 in 12 months time. In the long-term, the Ukraine Interest Rate is projected to trend around 8.00 percent in 2020, according to our econometric models.