andriy pyshnyy : national bank of ukraine press briefing - monetary policy decisions speech by mr andriy pyshnyy, governor of the national bank of ukraine, at a press briefing on monetary policy decisions, kyiv, 8 december 2022. * * * dear colleagues, i would like to inform you that the board of the national bank of ukraine has decided to keep the key policy rate at 25 % per annum. the nbu has also decided to raise reserve requirements for banks. this will enhance monetary transmission, support exchange rate stability, and gradually slow inflation in 2023. inflation continues to grow as expected, but the growth is slower than forecast by the nbu. the consequences of the war are the main reason behind this year's increase in inflation. they lead to higher production costs and shortages of some goods. in particular, an escalation of attacks against energy infrastructure of ukraine : affects economic activity in various sectors – from metals industry to food industry, animal farming, and the services sector causes production cuts, leading to a decrease in supply of goods spurs households'demand for fuel, which creates additional pressure on energy prices. all of the above is driving an increase in prices for a wide range of goods and services, with prices for some items surging. at the same time, overall inflation dynamics remain under control, and prices are rising slightly slower than forecast by the nbu. first, the gradual tightening of monetary conditions following the key policy rate hike to 25 % in june and fixing the official hryvnia exchange rate are playing a major role in stabilizing inflation expectations. second, fx market regulation and the introduction of new savings protection instruments contributed to a narrowing of the spread between the hryvnia exchange rate on the cash market and the official exchange rate. third, the nbu and the government are following their joint plan to cut monetary financing of the budget deficit. coupled with the above factors, this helps ease pressures on the fx market and reduce net fx sales by the nbu. 1 / 4 bis - central bankers'speeches in addition, large inflows of financial assistance drove an increase in international reserves to almost usd 28 billion, which exceeds the pre - war level. this strengthens the nbu's capability to maintain exchange rate stability. unchanged utility tariffs also remain important for restraining inflation. after this year's inflation surge, the growth in consumer prices will slow as of the end of next year. this should

back of possible problems with the regularity of international aid provision and the repercussions of the war russias attacks on ukrainian energy infrastructure facilities are increasing the risk to ukraine's ability to go through the coming winter smoothly the duration and intensity of hostilities, are increasing the risk that a large part of ukrainians who had gone abroad, will not return, and that some more ukrainian may decide to leave the country. there is still a risk that the " grain corridor " will cease to operate. instead, the rapid implementation of a recovery plan for ukraine, generating foreign investment inflows and substantial funding could accelerate economic growth to twodigit figures, and facilitate faster return of inflation to its target of 5 % set by the nbu. the nbu board has decided to keep its key policy rate at 25 %. supporting the exchange rate stability and protecting international reserves require ensuring that yields on hryvnia assets stay attractive in the long run. this is one reason why the nbu has decided to keep its key policy rate unchanged. interest rates on hryvnia deposits continue to rise in response to the key policy rate hike in june. we certainly appreciate the ministry of finance's decision to increase the rates on hryvnia domestic government debt securities. first, such step has already enabled a sizeable increase in volumes of borrowing, which reduces the need of monetary financing of the budget. second, it will provide the additional necessary impetus to other rates, which will make hryvnia assets more attractive. 3 / 4 bis - central bankers'speeches in order to stabilize exchange rate expectations and reduce pressures on international reserves, the nbu developed a new mechanism that will provide households with more options to protect their savings from the risk of exchange rate fluctuations and will help dampen demand for fx cash. such an instrument will enhance the effect of monetary transmission, and improve resilience of the fixed official exchange rate regime. moreover, the nbu has developed a set of potential measures for reinforcing monetary transmission and optimizing the structural surplus of hryvnia liquidity. the detailed design of these measures is being discussed as part of current consultations of the nbu and the ministry of finance with the international monetary fund. the updated forecast, like the previous one, envisages maintaining the key policy rate at a level of 25 % at least until q2 2024. if required, the nbu stands ready to raise the key policy rate above its forecast and