New Ukraine central bank governor surprises with rate pause at first policy meeting

Shevchenko has made reassuring noises to investors and the International Monetary Fund about stability and keeping the central bank independent - a key condition in Ukraine's $5 billion loan deal with the IMF. But he has also stressed the need to make loans cheaper for struggling businesses and consumers, which President Volodymyr Zelenskiy's government and lawmakers have also called for.

Ukraine's central bank kept its main interest rate at 6% on Thursday at the first monetary policy meeting under new Governor Kyrylo Shevchenko, who took charge last week promising to help revive an economy pummelled by the coronavirus pandemic. Most analysts had expected a cut.

Instead, the decision keeps the interest rate at the historic low of 6% set under Shevchenko's predecessor Yakiv Smoliy, whose shock exit in early July rattled investors. "The Board of the National Bank of Ukraine has decided to keep its key policy rate at 6% per annum," it said in a statement. "This on the one hand will curb price growth as the economy recovers in 2021–2022, while on the other hand leaving room for further decreasing the cost of credit to one-digit levels."

The decision came as the government was set to relaunch a Eurobond issue that it had to abort after the resignation of Smoliy, who complained of "systematic political pressure" and the harassment of central bank officials. Shevchenko has made reassuring noises to investors and the International Monetary Fund about stability and keeping the central bank independent a key condition in Ukraine's $5 billion loan deal with the IMF.

But he has also stressed the need to make loans cheaper for struggling businesses and consumers, which President Volodymyr Zelenskiy's government and lawmakers have also called for. Under Smoliy, the central bank brought rates to their lowest level since Ukrainian independence in 1991, but he was criticized for not doing so faster and for not allowing the hryvnia to devalue.