##plete rapidly on the back of the need to maintain exchange rate stability and imbalances will keep building up in the economy. what are the current price dynamics? in april, inflation accelerated to 16. 4 % yoy. in particular, core inflation rose by 13 %. in monthly terms, prices grew by 3. 1 %. according to the nbu ’ s preliminary estimates, inflation continued to grow in may. as of now, inflation is restrained by : ▪ ▪ ▪ ▪ ▪ a certain recovery in the economic activity a gradual setting up of logistics an increase in supply from domestic producers and importers an excess of agricultural inputs and a relatively low demand for them the nbu fixing the official exchange rate and limiting its fluctuations on the interbank market, and the government imposing administrative caps on prices. the liberation of ukraine ’ s northern regions ( kyiv, chernihiv, and sumy oblasts ) and the ukrainian army ’ s resistance in southern and eastern regions restrained the deterioration in inflation expectations. at the same time, the disruption of production and logistics by the war is fueling inflation. high global energy prices also remain a significant inflationary factor, putting pressure on consumer inflation, both directly and indirectly, through higher production costs. third, ukraine is also in part importing global inflation, which has hit a record - high. in particular, the current inflation rate in the united states and euro area countries is over 8 %. how will prices behave in future? despite the gradual recovery of the economy, the upward trend in inflation will continue over the coming three months. this could worsen inflation expectations even further, and encourage depositors to convert their hryvnia savings into fx ones. for this reason the nbu has decided to return to an active interest rate policy to prevent these negative trends. why did the nbu raise the key policy rate significantly? after considering several scenarios, the nbu decided to raise the key policy rate by a whole of 15 pp, to 25 % per annum. the nbu believes that a slight increase in the key policy rate wouldn ’ t have had the desired influence on the financial and economic system. the first reason for this is that the monetary transmission mechanism has only a limited effect in wartime. second, this would have resulted in depositors taking a wait - and - see approach and, investors having weak interest in hryvnia assets. third, to revive interest in hryvnia assets, their yields must exceed expected inflation rates

luis m linde : united kingdom and spain – assessing current issues intervention by mr luis m linde, governor of the bank of spain, at the dinner opening the 25th tertulias hispano - britanicas, madrid, 26 october 2012. * * * almost a quarter of a century back, following the visit by her majesty queen elizabeth ii to madrid in 1988, a group of spanish and british diplomats, politicians, academics and civil servants had an excellent idea. they took advantage of the gibraltar dispute not to further cool relations between spain and the united kingdom, or to squabble some more, but rather to seek to be closer friends and try and understand one another better. today marks the 25th edition of the tertulias. let me welcome all those taking part, firstly and especially our british friends, who honour us with their presence. a few days ago, perusing james boswell ’ s legendary book on the life of samuel johnson, one of european culture ’ s literary giants, i came across several paragraphs in which boswell relates dr johnson ’ s interest in spain. he was convinced that spain was a greatly unknown country in england and in europe, and he suspected it could teach much to those taking the trouble to travel there. samuel johnson made this statement around the mid - 1760s. today, spain is no doubt much better known in the united kingdom than in johnson ’ s time, as it is also the case for the united kingdom being better known in spain. but everything is relative and i believe it ’ s not difficult to spot black holes, mistaken notions and errors of understanding on both sides. while these tertulias are usually an opportunity to overcome some of these problems, they most importantly allow us to understand our respective stances on current, important or pressing issues. and we also enjoy ourselves. because, unlike other meetings, the tertulias are, from my experience, a rather entertaining event. i still have fond memories of the meetings i attended and the discussions we had in the now distant 1990s in santiago de compostela, in seville, in santander and also in oxford and in edinburgh. the tertulias were instituted at what was a key time in recent european history : the disappearance of the berlin wall, german reunification, the collapse of the soviet union and the start of the european monetary union project. next came the great economic expansion at the onset of the 21st century, the international financial crisis and the serious economic