MOSCOW, September 19. /TASS/. The Board of the National Bank of Ukraine has decided to keep the key interest rate at 13%, the regulator reported on Thursday.
"Considering the balance of risks and the need to return inflation to the target of 5% in the next few years and ensure the stability of the foreign exchange market, the Board of the National Bank of Ukraine decided to keep the key rate at 13%," the statement said.
The National Bank of Ukraine noted that the rate of price growth has accelerated in recent months, as expected. In August, consumer inflation rose to 7.5% year-on-year, which was close to the National Bank's July forecast. According to the statement, the growth in consumer prices was due to the impact of the worst harvests this year, increased business spending on food raw materials, energy and wages, as well as the effects of the weakening of the hryvnia exchange rate in previous months. However, inflation expectations remained fairly stable, the report said.
Inflation will increase moderately in the coming months due to the expansion of aggregate demand as a result of budget spending, increased corporate spending on wages and electricity, and an increase in excise taxes, the regulator said. However, the National Bank’s balanced monetary policy and the reduction of external price pressures will contribute to a gradual deceleration of inflation and a return to the 5% target in the next few years, the report said. In order to achieve this goal, the regulator plans to maintain a controlled situation on the foreign exchange market.
International financial support and measures to accumulate domestic resources are expected to help the government to finance the budget deficit without resorting to emission sources of financing. At the same time, external assistance should allow the National Bank of Ukraine to maintain an adequate level of international reserves and ensure a controlled situation on the foreign exchange market, the regulator said in the statement.
The National Bank of Ukraine set the rate at 13% on June 13, reducing it by 0.5 percentage points. In April, the rate was lowered by 1 percentage point. On June 2, the regulator raised the key rate by 15 percentage points from 10% to 25% and then maintained it at this level for more than a year. On July 27 last year, the regulator reduced the rate from 25% to 22% and then gradually lowered it.