Ukraine's central bank raises key rate, again

Over the past 2 months, the consumer inflation declined more slowly than the regulator projected, the report said.

At the same time, since the previous decision on key policy rate and the publication of the recent NBU’s macroeconomic forecast, (12.2%) risks that may restrain a decline in inflation next year have become more likely to materialize.

Read alsoCentral bank says inflation in Ukraine to exceed forecast level by year-end"In view if the need to offset the influence of these risks and to bring the inflation rate back to the target, the NBU has decided to hike the key policy rate to 14.5% per annum," the NBU said.

Among the risks that could curb the inflation drop next year the National Bank names an excess of spending over target level in the adopted national budget for 2018, as well as increased risks of a postponed disbursement of the next loan tranche under a program of cooperation with the International Monetary Fund.

In addition, the regulator indicated among the risks of growing raw food prices, which can further affect prices of highly processed products, as was the case in the second half of 2017.

The National Bank also noted that the growth of the world economy might be more significant than previously expected, which can stimulate further labor migration and, consequently, lead to higher wages.

Read alsoUkraine's GDP may grow by more than 3% in 2018According to the regulator's estimates, the said factors over the recent months have worsened the inflation expectations of businesses and population.

As UNIAN reported earlier, the National Bank from October 27 raised its key rate to 13.5% from 12.5%, which the regulator maintained for three months in a row, namely in July, August, and September.

In late October, the central bank also raised the inflation forecast for the end of 2017 to 12.2% from 9.1%, projected earlier.

After the publication of official statistics, saying that the inflation in November was reported at 13.6% in annual terms, the NBU reported that inflation at the end of the year would exceed the projected 12.2%.

Read alsoUkraine’s Parliament approves State Budget-2018: Key figuresAccording to government estimates, inflation in 2017 will stay at 11.2%. The consumer price growth is expected to slow down to 9% next year.

Ukraine's key lenders – the International Monetary Fund and the World Bank – forecast a 10% inflation in 2017.

The NBU's maximum historical policy rate at 30% per annum operated from March 4 to August 28, 2015.