REUTERS
The National Bank of Ukraine (NBU) has raised its inflation forecast for 2017 from 8% to 9.1% and kept it 6% for 2018, which corresponds to the previously announced targets of 8% ± 2 and 6% ± 2 respectively, according to the NBU's website referring to the latest quarterly inflation report.
The regulator said that the revision of the inflation forecast for 2017 was due to the effects of doubled minimum wages introduced January 1, 2017.
However, the NBU believes that inflation will return to the central value of the target range already in 2018, while in the medium term, the core inflation is expected to stabilize at around 5% against the background of prudent monetary and fiscal policies.
Read alsoUkraine's state debt grows 8% to $71 bln in 2016The regulator also predicts a gradual acceleration of economic growth in the years 2017-2018, to 2.8% and 3% respectively, due to expansion of private consumption after the minimum wage increase.
"As a result of additional inflationary pressure due to the increase in the minimum wage, easing of monetary policy is expected to be sufficiently restrained, while real interest rates will remain relatively high in order to maintain the appeal of depositing money in the national currency," the NBU said.
As UNIAN reported earlier, the National Bank of Ukraine on January 26 decided to leave interest rates at the same level of 14% per annum. The regulator took a similar decision at the last meeting on December 8, 2016, after cutting rates for six consecutive months.
Read alsoUkraine's economy in 2017 to grow by 1.9% - UN forecastThe NBU's maximum historical discount rate at 30% per annum operated from March 4 to August 28, 2015.
Inflation in Ukraine in 2016 (December 2016 to December 2015) fell to 12.4% from 43.3% in 2015, reaching the lowest level in the last two years and remaining at the level of the NBU's annual inflation target of 12% ± 3.