domestic government bonds. these borrowings will make it possible for the government to repay external public debt, the repayments of which will peak in 2019 – 2020. inflows of debt capital and investments to the private sector will continue as well. as a result, international reserves will hover around usd 21 to 22 billion during this and the subsequent years. the usual increase in uncertainty during presidential and parliamentary elections poses the main internal risk to the said macroeconomic forecast, including ukraine ’ s ability to meet its inflation target in 2020. the nbu will consider this risk in its monetary decisions mainly due to its impact on the financial market and inflation expectations. the following external risks are also important : 2 / 3 bis central bankers'speeches the global recession and lower raw commodity prices stronger geopolitical tensions, particularly due to the uncertainty around brexit uncertainty over the volume of gas transit through ukraine starting in 2020, as pipelines bypassing the country are being built to deliver gas to europe an escalation of the military conflict and new trade restrictions introduced by russia. taking into account the updated macroeconomic forecast and the said assessment of risks, the nbu board decided to decrease the key policy rate to 17. 5 % per annum. what will be the nbu ’ s monetary policy stance in future? as it initiates an easing cycle, the nbu board points out that its further steps will depend on whether or not inflation risks materialize and whether or not inflation expectations improve. however, despite there being macroeconomic preconditions for starting a cycle of key policy rate cuts, this process might be impeded by the materialization of risks to financial stability ( that were mentioned in the statement of the financial stability council last week ), and to the central bank ` s independence. the nbu will closely monitor developments in ukraine and, if the above risks materialize, will respond by deploying monetary tools. a new detailed macroeconomic forecast will be published in the central bank ’ s inflation report on 3 may 2019. a summary of the discussion by monetary policy committee members that preceded this decision will be published on 6 may 2019. the next meeting of the nbu board on monetary policy issues will be held on 6 june 2019. i thank you for your attention! 3 / 3 bis central bankers'speeches

yakiv smolii : national bank of ukraine press briefing - monetary policy statement speech by mr yakiv smolii, governor of the national bank of ukraine, at a press briefing on monetary policy, kyiv, 25 april 2019. * * * dear colleagues, please be informed that the board of the national bank of ukraine has decided to cut the key policy rate to 17. 5 % per annum. inflation has been on a steady decline towards the 5 % target, allowing the nbu to launch a cycle of key policy rate cuts. at the same time, the nbu board sees risks that may hinder the plans to lower the rate. what inflation developments followed the last key policy rate decision? in march 2019, consumer price inflation continued to slow and reached 8. 6 %, in line with the nbu ’ s latest forecast. core inflation declined even faster than expected – to 7. 6 %. this is evidence that underlying inflationary pressure continued to ease in early 2019. the decline in inflation was supported by the nbu ’ s tight monetary policy, which was one of the reasons for the strengthening of the hryvnia. that, in turn, impacted the prices of imported goods and goods with a significant import share in their production costs despite the electoral events, conditions in ukraine ’ s financial market remain benign, while inflation expectations of households, businesses, banks, and financial analysts continue to improve. in addition to monetary factors, an increase in the domestic supply of some food products, and lower global food prices also dampened inflationary pressures. what will be the future trajectory of inflation? we expect that inflation will continue to decline gradually. more specifically, it will decrease to 6. 3 % by the end of 2019 and to 5. 0 % by the end of 2020. as projected before, inflation will enter the target range of 5 % ± 1 pp in early 2020. the slowdown in inflation was driven by the following factors : first and foremost, tight monetary conditions and restrained fiscal policy second, wage growth decelerated, as it approached the rates of wage growth of neighboring countries and labor migration from ukraine declined in intensity third, the hryvnia appreciated in q1 2019, holding down the future growth in prices for nonfood products fourth, global prices for natural gas declined, which will be reflected in price changes in the domestic market fifth, the supply of both domestic and imported food products increased. these factors will also contribute to the continued slowdown