KIEV, June 8 - The National Bank of Ukraine reduced the discount rate on Tuesday from 10.25% to 9.5%, the NBU said in a statement.

The NBU had held the discount rate at 10.25% since August 12, 2009.

"The monetary policy department automatically reacts to changes in on the money-credit market through setting interest rates on the NBU's assets and liability operations at the appropriate level," an order from the NBU's executive council dated June 7.

The NBU said the reduction had been the result of the improving macroeconomic situation in January-May with GDP growth coming to 4.8% in the first quarter of 2010. In addition, inflation slowed in annual terms to 8.5% at the end of May.