kyrylo shevchenko : national bank of ukraine press briefing monetary policy statement speech by mr kyrylo shevchenko, governor of the national bank of ukraine, at a press briefing on monetary policy, kyiv, 21 october 2021. * * * dear colleagues, i would like to inform you that the nbu board has decided to raise the key policy rate to 8. 5 % per annum. this decision comes in line with a decline in inflation to 5 % at the end of next year projected in the baseline scenario of the updated macroeconomic forecast. what price developments followed the last monetary policy meeting of the nbu board? as expected, consumer inflation ranged between 10 % and 11 % in the past several months, which was close to the forecast the nbu made in july. underlying inflationary pressures also expectedly persisted, and inflation expectations remained high. at the same time, benign fx market conditions restrained price growth, keeping core inflation below the july forecast trajectory. how will prices behave going forward? the nbu expects the growth in consumer prices will peak in september – october this year. afterwards, the inflation trend will reverse, and inflation will slow to 9. 6 % at the end of the year. the nbu expects inflation to decline to the 5 % target at the end of 2022 and remain close to this level further on. inflation will slow thanks to waning low base effects, fx markets remaining favorable, and this year ’ s large harvests. the monetary policy tightening actions taken earlier by the nbu, in particular the optimization of the monetary policy design, a complete phaseout of anti - crisis monetary measures, and raising the key policy rate, will also curb growth in consumer prices. at the same time, a faster disinflation will be restrained by energy prices remaining high longer and by sustained consumer demand. considering the lasting effects of these pro - inflationary factors, the nbu will have to tighten the monetary conditions in 2022 – 2023 more than was expected in july in order to bring inflation to the target of 5 %. what will be the overall state of the ukrainian economy? the economy has been actively recovering in h2 2021. this is evidenced by high - frequency indicators of economic activity. in particular, a record harvest of early grain crops spurred growth in agriculture. robust consumer demand supported retail trading and passenger turnovers. a pickup in investment activity, together with a favorable external price environment, contributed to a recovery in construction and industrial production.

is the reset of the relationship between the nbu and ukraine's ministry of finance based on a clear understanding of the limits of each other's mandate, and at the same time on awareness of our common goal. 4 / 6 bis - central bankers'speeches in one of her interviews, christine lagarde emphasized the growing role of coordinated actions by monetary and fiscal authorities amid high turbulence. " monetary and fiscal policy play a complementary role in fighting price pressures. they must work hand in hand and not contradict each other, " she said. this is hard to deny. such cooperation somehow expands the nbu's mandate, engaging the central bank to resolve the problem of closing the fiscal gap, a task that is usually beyond the scope of the central banks'attention. ms gita gopinath also mentioned this at our meeting yesterday. but the emergency situation – the new reality – requires that we take novel approaches. it was thanks to the new quality of interaction with the fiscal authorities that we were able to revive the domestic debt market, making it possible to raise more than uah 1 trillion in domestic financing amid a full - scale war. what is more, the nbu's participation in the clampdown on shadow schemes that used to cause the billions of hryvnias losses of the state budget has made this fight increasingly more effective. today, these funds are going towards the budget and fueling our ability and capacity to resist. and most important, such synergy makes it possible to find nonmonetary channels for boosting revenues to the budget. even as the war grinds on, we have not resorted to central bank financing of the budget deficit since the beginning of 2023. 4. as central bankers, it is vital for us to learn to take a broader look, to search for new ways of pursuing our mandate in order to maintain macrofinancial stability in the new reality. the nbu took this approach by participating in the implementation of the government's sanctions policy against russia. the tightening of sanctions, the monitoring of sanctions compliance, the continual tracing down and detection of sanctions evasion schemes, the isolation of russia's financial system – all of these efforts are gradually draining the resources that russia is using to bankroll its war. 5. uncertainty generates global risks to central banks'independence. kristalina georgieva, managing director of the imf, also talks about them in her program article : strengthen central bank independence to protect the