May 7, 2019 / 2:50 PM / a month ago

Ukraine central bank to cut rates further, possibly sharply, this year: Reuters poll

KIEV (Reuters) - Ukraine’s central bank will make at least one further cut in its main interest rate this year as price pressures ease, a Reuters poll of analysts showed on Tuesday.

Five of the 12 analysts surveyed expect the rate to end 2019 at 16.0 percent, down from 17.5 percent currently. Three saw the year-end rate at 17.0 percent and the others in a range between 16.5 percent and 11 percent.

The central bank cut the rate, from 18.0 percent, for the the first time in two years in late April, after inflation fell to 8.6 percent in March from 9.8 percent at the end of 2018. It also signaled further cuts.

“Inflation has been slowing better than expected, and we think the central bank will cut the rate gradually by 0.5 percentage point (reductions) to 16 percent by year-end,” said Mykhailo Rebryk from Raiffeisen Bank Aval.

He said lower prices of gas and oil products - key Ukrainian imports - along with tough monetary conditions had helped bring inflation closer to the central bank’s forecast.

The central bank sees inflation at 6.3 percent at the end of 2019 while the analysts’ median forecast was 7.8 percent.

The central bank said on Monday it was ready to launch a monetary easing cycle to encourage an increase in bank lending and underpin economic growth, but did not spell out what level it expected the rate to be at year-end.

Reporting by Natalia Zinets; editing by John Stonestreet

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