On NBU Raising Policy Rate

January 31, 2018

Keeping inflation within the established 6-10% range has failed this year. The real inflation rate is about 14%. This affects hryvnia's exchange rate. Meanwhile, the capital inflow is slow and we have almost no foreign funding.

Reviewing the National Bank's decision to raise policy rate to 16%, we should note that domestic inflation and depreciation of hryvnia, and therefore, a rise of all imported goods prices create inflationary pressure mechanisms. NBU decided to fight this situation with limited access to loans. Limiting access to loans, as per NBU estimations, will cause exporters experiencing difficulties with access to liquidity to sell more foreign currency. Currently, with the exception of mandatory sale, exporters are not willing to sell foreign currency.

However, restricting access to resources will delay economic growth with all ensuing consequences. Therefore, in the current situation, raising policy rate is a rather debatable decision. Given that many of our economic problems are structural in nature and are related to existing structural imbalances, it is unrealistic to resolve these problems just through raising policy rate without the support of broader economic policy measures.

Scientific Consultant of the Razumkov Centre on Economic Issues Volodymyr SIDENKO


Volodymyr Sidenko

Senior Research Fellow


  • Taras Shevchenko National University, Kyiv, Faculty of International Relations and International Law, Department of International Economic Relations (1977).
  • Doctor of Science in Economics (2000), member of the National Academy of Sciences of Ukraine (2006), author of over 200 scientific articles, including the articles published abroad (the United Kingdom, the USA, Germany, Russia, Hungary, etc.).

Work experience:

  • Research Associate, the Head of the Institute for Social and Economic Problems of Foreign Countries, the Academy of Sciences of Ukraine (1980–1992), Institute of World Economy and International Relations of NAS of Ukraine (1992–2000), Institute of Economic Forecasting of NAS of Ukraine (1992–2005), Institute of Economics and Forecasting of NAS of Ukraine (2005–2012).
  • Advisor on foreign policy to the President of Ukraine (1994–1995).
  • Director of economic programmes of the Razumkov Centre (2001–2004).

Spheres of activity: research on strategy and mechanism of foreign trade, structural transformations of economy, external aspects of economic growth, global economic regulation, international economic integration, international competitiveness, foreign investment, economic relations between Ukraine and the EU and regional groupings in the CIS.

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