Today the NBU Board presented the NBU Council with its proposals for the Monetary Policy Guidelines for 2021 and Medium Term.
During the presentation, NBU Deputy Governor Dmytro Sologub noted that further macrofinancial stability and sustainable economic development of Ukraine requires the monetary policy to remain consistent without compromising the principles used to build it in 2015–2020.
"The inflation targeting regime and the flexible exchange rate policy pursued by the NBU in previous years have proved effective. We managed to significantly reduce inflation and bring it closer to the medium-term target of 5%. A prudent monetary policy and adequate regulation of the financial sector helped Ukraine to go through the most acute phase of the coronavirus crisis without facing the severe economic consequences that we observed during the crises of 2008 or 2014,” said Dmytro Sologub.
He also stressed that the guidelines have been developed taking into account the goals, principles, and tools set in the Monetary Policy Strategy. This makes it possible to maintain the consistency of the NBU's policy. In addition, the key strategic characteristics of the monetary policy that are proposed for approval in the Monetary Policy Guidelines are in line with the commitments Ukraine undertook by signing the economic and financial policy memorandum with the International Monetary Fund.
In view of the above, the NBU Board submitted the following main proposals to the NBU Council:
- to continue the inflation targeting policy in order to ensure price and financial stability, and to promote sustainable GDP growth
- to maintain price growth at the level of 5% +/- 1 pp in the medium term
- to continue adhering to the floating exchange rate regime without targeting a certain exchange rate level or range.
The NBU Board also emphasized during the presentation that monetary policy decisions will remain predictable and consistent and will be aimed at bringing inflation to the 5% target over the horizon of 9–18 months.
Analytical support and communication of monetary policy decisions will continue to be improved in order to increase understanding and confidence in it and to create a predictable economic environment for businesses, households, and foreign investors.
It was also noted that in order to promote economic growth, the NBU will use the flexibility of the inflation targeting regime, in particular by allowing inflation to deviate temporarily from the target, unless it prevents it from returning to the target range over an acceptable horizon.
The NBU Council took into consideration the NBU Board’s proposals for the Monetary Policy Guidelines for 2021 and Medium Term in order to prepare the final draft, which is then to be approved and submitted to the parliament. The NBU Council plans to approve the document in September 2020.
The NBU Board’s proposals for the Monetary Policy Guidelines for 2021 and Medium Term are available by visiting this link.
Presentation of NBU Board proposals for the Monetary Policy Guidelines for 2021 and Medium Term
For reference
According to the Law of Ukraine On the National Bank of Ukraine, the NBU Council develops the Monetary Policy Guidelines on the basis of proposals submitted by the NBU Board, officially publishes the document, and submits it for information to the Verkhovna Rada of Ukraine annually before 15 September.