other words, the first and the second role of monetary policy as identified by friedman are closely related to each other. while policymakers and economists understand that price stability represents a situation in which prices could remain stable in a medium to long term, inflation dynamics could evolve with a long lag and accompany nonlinear effects. against such a backdrop, if we focus narrowly on the current observed inflation rate, there is a risk that necessary monetary policy adjustments might be delayed, inducing large fluctuations in economic activities. in that regard, central banks around the globe seem to strive for exploring optimal ways to communicate a quantitative expression of price stability with different consequences. central banks under an inflation targeting regime announce the target level of inflation rate. the bank of japan and the european central bank ( ecb ) announce some kind of numerical definition of price stability, while the federal reserve provides a medium - term forecasted value of inflation given the current economic conditions and appropriate policy. the second challenge is how to design financial system policy. although we can recognize a risk of a nonlinear change of the economy such as the burst of the bubble, we cannot take preemptive monetary easing before a bubble burst. it is impossible to forecast precisely when the burst will take place. once we recognize such a change, it is appropriate to cut the policy interest rate more than the standard taylor rule suggests, as with the current policy by the fed. at the same time, the japanese experience shows that it is quite difficult to create sufficiently benign financial conditions only with a reduction in the policy interest rate when the balance sheets of firms and financial institutions are severely devastated. when looking at the current u. s. financial situation, the yields of corporate bonds with low credit standings have not been reduced yet compared with the level in summer 2007, despite the massive decrease in the policy rate. the fact suggests that in addition to the policy interest rate changes ex post, it is important to design a policy and institutional framework less prone to the formation of a bubble ex ante. while i have already mentioned possible measures in terms of monetary policy, how to align supervision and regulations remains an important challenge that needs to be addressed, so as not to let financial institutions'behaviors amplify economic fluctuations. the third challenge is the so - called banking policy of central banks. for effective monetary policy, stable financial system and well - functioning financial markets are indispensable. the events since summer 2007 have highlighted that the loss of market liquidity has played a crucial role. although the

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, 15 june 2023. * * * dear colleagues, the board of the national bank of ukraine has decided to keep its key policy rate at 25 % per annum. this will help maintain the attractiveness of hryvnia - denominated instruments, preserve the sustainability of the fx market, and reduce inflation. combined, these results will pave the way for the further easing of fx restrictions. the pace of consumer price growth continued to decline faster than expected. inflation eased to 15. 3 % yoy in may. apart from the base effect, the pullback in inflation was driven by an ample supply of food and fuel, a stronger hryvnia cash exchange rate, and improved exchange - rate and inflation expectations. among other things, the nbu's efforts to keep the key policy rate high and make hryvnia instruments more attractive made it possible to stabilize the fx market and improve expectations. although headline inflation has decelerated, underlying inflationary pressures remain rather high. thanks to the removal of supply chain disruptions, the reduction of prices in the global commodity markets, and the nbu's consistent monetary policy, the central bank expects that inflation in ukraine will continue to decelerate. however, this process will not be as rapid as in previous months. first, the base effect, which contributed to a significant drop in inflation in h1 2023, will gradually fade. second, price dynamics will be affected by increases in certain utility tariffs and the announced return of pre - war taxes on fuels. in addition, the destruction of the kakhovka hpp dam will have an adverse impact on prices. 1 / 3 bis - central bankers'speeches by the nbu's early estimates, this will contribute about 0. 3 pp to this year's inflation rate because of how it has complicated the operation of multiple enterprises, and due to the partial loss of crops, primarily vegetables, that it has led to. the war is taking an increasingly large toll, but steady inflows of international aid and the revival of the domestic debt market have made it possible to cover the significant budget deficit without resorting to monetary financing. since the beginning of the year, international partners have granted ukraine about usd 20 billion