The Board of the National Bank of Ukraine (NBU) jointly with the Public Council started discussing key points of monetary policy for 2017 and the short-term prospects, which are planned to be approved on December 21, Interfax-Ukraine reports.
“NBU Board considers that its main task is the development of main principles of the monetary policy and exercising control over its implementation. In this context, we work with NBU Board. The first step was made on the part of the Board – formation of proposals in development of this policy. We publish these proposals for public discussion in the society; until now such discussion was conducted insufficiently. We have two weeks for consideration of public proposals; in three weeks we will approve the document”, NBU Board Chair Bogdan Danylyshyn said at the first session of the Public Council on Thursday.
In the meantime, he emphasized that the general purpose is the formation of the stable banking system and stable monetary unit in Ukraine. “We will do our best to find joint dialogue and joint position”, he added.
The NBU Board proposals, presented at the meeting, on fundamental principles of the monetary policy for 2017 include using the regime of inflation targeting for achieving price stability, floating exchange rate, NBU independence. Meanwhile, NBU emphasizes the key role of interest rate as the tool of monetary policy.
As noted in NBU document, the inflation targeting is based on a new Keynesian model of economy, according to which it is not recommended conducting expansionist policy for short-term stimulation of economic growth, because it will lead to higher inflationary expectations with further economic misbalance.
In addition, some participants of the discussion hold to the opinion that the policy cannot expect “just any currency rate”: population and market players need to understand that there are some limits for currency exchange rate. In particular, this can be an annual average exchange rate, which is included into the budget. In addition, according to experts, it is not clear in the document how NBU intends to approximate the declared cost of loan resource (interest rate) to its market value.
