Ukrainian Central Bank is cutting rates, when inflation in Ukraine slows

According to the statement released on the 8th of August 2010 the National bank of Ukraine cut the key interest rate to 7,75% to boost lending to companies and spur economic activity. Since June 2004 the rate was never so low.

 

In July 2010 the inflation rate in Ukraine dropped for a fifth month to 6,8%. The government expects inflation to reach 9% in year 2010, which is considered a success since the rate will go below 10% for the first time since 2003.

 

Currently Ukrainian banks still prefer to buy government debt and central bank deposit certificates, rather than making loans, while many companies do not even want to borrow money because of the moderate expectations of revenue growth.

 

Source: Bloomberg Businessweek

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