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Ukraine’s monetary policy to soften since 30 November

The National Bank of Ukraine reports that behavior of macroeconomic and monetary indicators in January-October 2011 speaks for persistence of positive trends in the national economics. Particularly, real GDP growth was 6.6% (pursuant to preliminary calculations) in quarter III 2011, from the same period last year, the industrial production growth was up 8.6% for nine months, and agriculture – up 16.6% for 9 months. Extension in investment activities was an inciting factor for economic development. In particular, investments to capital assets increased by 21.2% in January-September this year, from the same period last year. 
Carrying out a proper monetary policy facilitated deceleration of inflation rates. In October 2011, consumer inflation was down to 5.4% (in annual terms), from 11.9% in June last year. The consumer price index growth was 4.2% in January-October 2011, from 7.9% growth in the same period in 2010.

A further differentiation in reserve requirements towards strengthening of preferential reserve requirements for means attracted in the national currency was used for dedollarizing of economic relations. At the same time, the specified measures should not prevent banks from fulfilling functions as settlement and loan institutions. For a purpose of maintaining those functions, more flexible approaches towards formation of obligatory reserves by banks were put in place, particularly by means of providing an opportunity to form a portion of reserves in the banks’ correspondent account at the National Bank of Ukraine.
Because of having implemented more flexible approaches towards formation of obligatory reserves by banks, the following procedure for the formation of obligatory reserves will be introduced in 30 November 2011:
- in a dedicated NBU account #3203 “Obligatory reserves transferred by banks” – in the amount of 70% of total obligatory reserves formed in the previous reporting reserve period;
- in the correspondent account at the National Bank of Ukraine – the remaining portion of total reserves formed in accordance with established requirements for a relevant period.

Source: National Bank of Ukraine