Ukraine’s 30% Interest Rate Hike
The Central Bank of Ukraine has suddenly increased the interest rates from 19.5 percent to 30 percent so as to cut down on inflation rate and also increase its battered currency. This announced standard refinancing rate will be implemented starting on Wednesday.
The interest rate hike is happening at the same time when the Ukrainian government is applying for a $17.5 billion (£11.4 billion; €15.6 billion) loan from the International Monetary Fund (IMF).
The forecasted inflation rate for this year is at least 26 percent and the Ukrainian hryvnia reduced greatly against the dollar. The hryvnia has removed 80 percent of its value since last April, as a result of pro-Russian activist actions in the country’s eastern Donetsk and Luhansk regions.
In the previous week, the hryvnia became its lowest value of 33.75 to the United States dollar and later regained.
All the political activities in the country has negatively affected the Ukraine’s economy, which is expected to reduce by 5.5 percent in 2015.
The interest rate has been hiked twice within two months, following the central bank’s hike of 14 percent in February.
The Ukrainian parliament adopted a group of reforms that would be used to gauge if it will avert economic degradation in upcoming weeks. These reforms contain proposed changes to the energy and tax laws and revamping the budget of the government.
Of course the International Monetary Fund (IMF ) demanded that it produced these reforms as a criteria for financial loan. The final decision for the financial bailout will be ascertained in the next executive board meeting of the IMF on the 11th of March.