Having analyzed the behavior of macroeconomic and monetary indicators in the January to July period, the Board of the National Bank of Ukraine has pointed to the maintenance of price stability and positive developments in the money market. 

In the January to July period, annual CPI inflation fluctuated within a range of "minus" 0.8% (in March and April) to zero (in July).

 Such price dynamics helped improve market expectations and contributed to strengthening confidence in the monetary unit of Ukraine. This is corroborated by the prevailing trend toward using the hryvnia as a medium of exchange and a store of value and improvement in the deposit maturity structure.

Household deposits in the national currency have demonstrated monthly growth this year, which stood at 25.4 % in the January to July period. At the same time, deposits in the foreign currency have risen by only 1.0 %. As a result, the deposit dollarization indicator went down from 43.7 % to 39.6 % over this period.

In the January to July period, the share of long-term deposits within the stock of deposits had climbed by 4.4 percentage point to 39.1 %.

The expansion of the banks' resource base has led to increased liquidity creation and brought down the cost of loans. Thus, the average daily balance of banks' correspondent accounts amounted to UAH 25.3 billion vs UAH 19.6 billion in 2012.

In July 2013, the average weighted interest rate on loans in the national currency went down to 15.7 % from 17.6 % recorded in December 2012, whereas that in the interbank credit market fell to 2.7 % from 8.1 % respectively.

The growth of the banks' deposit portfolio and improved market expectations have gradually ramped up lending. In the January to July period, loans had grown by 3.3 % vs negative growth rate ("minus" 0.2 %) in the respective period of 2012.

However, the unfavorable foreign economic situation for Ukrainian manufactures has exerted a persistent drag on economic growth. In Q1 and Q2 of 2013, real GDP grew by "minus" 1.1 %, compared with the respective periods of 2012.

Considering the above, with a view to reinforcing positive trends in the monetary sphere and promoting economic growth, pursuant to Articles 6 and 25 of the Law of Ukraine “On the National Bank of Ukraine”, Regulation on the NBU Interest Rate Policy approved by NBU Board Resolution No. 389 of 18 August 2004 registered with the Ministry of Justice of Ukraine on 2 September 2004 under No. 1092/9691 (amended), and guided by the goals and objectives set forth in the Main Principles of the Monetary Policy for 2013, the Board of the National Bank of Ukraine has approved Resolution “On the Money Market Regulation” No. 315 of 9 August 2013 that stipulates that the discount rate should be set at 6.5 % per annum (effective from 13 August 2013).

For reference

Pursuant to item 1 of NBU Board Resolution “On the Money Market Regulation” No. 209 of 6 June 2013, the discount rate was set at 7.0 % per annum (effective from 10 June 2013).