In May 2017, the money supply remained flat, amounting to UAH 1,088.7 billion. A slight reduction in the stock of deposits was offset by an increase in cash outside banks, according to preliminary monetary statistics data for May 2017.
In May, the stock of domestic currency deposits remained virtually flat at the previous month’s level Meanwhile, the stock of business deposits in domestic currency rose by 0.1% despite quarterly tax payments. Following a surge in April (by 4.2% mom), the stock of household deposits in domestic currency declined marginally by 0.3% mom. FX deposits (in US dollar equivalent) decreased by 0.1% mom.
In May, banks’ loan portfolio decreased slightly, driven primarily by a decline in the stock of FX loans due to valuation changes amid a further strengthening of the hryvnia against the U.S. dollar. Meanwhile, the stock of loans in domestic currency rose marginally by 0.2% mom, driven by an increase in corporate loans. Meanwhile, the stock of retail loans in domestic currency kept increasing, accelerating to 1.7% mom.
The NBU’s decision to resume its monetary easing cycle from mid-April 2017 and favorable FX market conditions prompted a further decline in retail rates. In May, interest rates on corporate loans in domestic currency continued to decline In May, interest rates on corporate loans in domestic currency went down by 0.3 percentage points mom and by 2.7 percentage points, bringing the annual growth rate down to 14%. At the same time, interest rates on household deposits declined further. In May, the interest rate on retail deposits declined by 0.6 pps to 12.2% p.a., while that on FX deposits went down by 0.3 pps to 3.4% p.a.
See the Macroeconomic and Monetary Review (June 2017) for greaterdetails on money market developments in May 2017.