Ukraine central bank forecast to cut 17% key rate on easing inflation: Reuters poll

Ukraine’s central bank will cut its key interest rate for the third time this year on Thursday amid slowing inflation and expectations that the new government will pursue reforms, a Reuters poll of analysts showed on Wednesday.

Some 13 respondents forecast a reduction to 16.5% from 17%, three expect a cut to 16%, while one analyst thought the rate would remain unchanged.

Interest rates have been in double digits since Ukraine plunged into turmoil following Russia’s annexation of Crimea in 2014 and the outbreak of a Moscow-backed separatist conflict in the eastern Donbass region.

But inflation dropped into single digits last year, giving the central bank more breathing space.

“The main reason (for the rate reduction) is the gradual slowdown of inflation,” said Kostyantyn Fastovets from Adamant-Capital, who forecast a cut to 16.5%.

According to the poll, annual inflation slowed in August to 8.9% from 9.1% in July and it will go down to 7.7% in December. The central bank sees inflation at 6.3% at the end of the year.