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, 25 january 2024. * * * dear colleagues, the board of the national bank of ukraine has decided to keep its key policy rate at 15 % per annum. this decision comes along with the need to maintain exchange rate sustainability, keep inflation moderate in 2024, and bring it to the target range of 5 % ± 1 pp over the monetary policy horizon. despite russia continuing its aggression against ukraine, the inflationary pressure eased significantly last year, including due to the nbu's consistent monetary policy inflation slowed to 5. 1 % yoy in november and stood at this level in december. good harvests and lower global energy prices were major factors behind the decrease in the pressure on prices. the moratorium on tariff increases for certain utilities played an important role. at the same time, a decline in core inflation to 4. 9 % as of the year end also points to a sizeable contribution made by the nbu's consistent monetary policy, in particular measures to ensure exchange rate sustainability and attractiveness of hryvnia assets. these measures helped improve exchange - rate and inflation expectations. despite the expected acceleration of inflation in 2024, it will remain moderate and will return to the target range in 2025 inflation will be within the target range in the coming months. from the middle of the year, it will accelerate somewhat as effects of last year's bumper crops wane. additional pressure on prices will come from the further recovery in consumer demand, as well as the pass - through of business costs to consumer prices, in particular due to persistently high security risks and wage increases. however, inflation will remain moderate, in part due to the nbu's measures to maintain exchange rate sustainability and the attractiveness of hryvnia assets. inflation is expected to reach 8. 6 % as of the end of the year. in 2025, it will return to its target range, slowing to 5. 8 % as of the end of the year. in 2026, inflation will meet the target of 5 %. this will be primarily driven by a decline in security risks, which is assumed by the forecast. it will ensure an overall improvement in expectations, and will allow restoring the logistics and production processes. the price pressure

, for the time being, the main scenario for the euro area remains that economic growth is expected to return to rates close to potential in the course of 2003. in fact, this expectation is consistent with all forecasts published by international organisations. private forecasters, on the whole, also seem to share the same view. moreover, financial markets have shown signs of stabilisation in recent weeks following a period of considerable turbulence. the expectation of an improvement in economic activity in the euro area is contingent on a recovery of growth in private consumption, supported by a reduction in actual and perceived inflation rates. this expectation is also based on a projected gradual recovery of the world economy and export growth which, together with the low level of interest rates, should help to strengthen investment. nevertheless, the uncertainty surrounding this scenario remains high. it is therefore very difficult, at this juncture, to predict the timing and strength of the economic upswing, both in the euro area and globally. turning to recent price developments, in september annual hicp inflation was 2. 1 %. for october, eurostat's flash estimate indicates an annual hicp inflation rate of 2. 2 %. this increase is again likely to reflect developments in energy prices, although no detailed information is available at present. looking at price developments for the remainder of 2002 and the early part of next year, despite the recent decline in oil prices, some upward impact may occur reflecting base effects and country - specific developments - such as increases in indirect taxes or specific developments in services prices. although difficult to anticipate, particularly due to the volatility of oil prices, a further increase in the annual rates of inflation around the turn of the year and a delay in the return to inflation rates below 2 % cannot be ruled out. however, this further increase should only be temporary. beyond the very short term, we consider that both the euro exchange rate, which has strengthened since early this year, and the overall economic environment are still contributing towards reducing inflationary pressure. moreover, there should also be a further unwinding of the indirect effects of previous increases in oil prices and other factors that have added to the stickiness of the annual rate of hicp inflation excluding unprocessed food and energy prices. however, for inflation rates to fall below 2 % in the course of 2003 and to remain in line with price stability thereafter, as indicated by recent forecasts, it is crucial that oil prices do not increase sharply again and that the upward