the forecast horizon. however, a prolonged, high - intensity war threatens to further destroy cities, infrastructure, and production facilities, and the extent of the destruction is difficult to estimate in advance. compared to the previous forecast, the risk of insufficient international financing this year has eased considerably, but the risks to regular financing remain. the following risks also remain significant : 2 / 4 bis - central bankers'speeches the emergence of additional budget needs to maintain defense capabilities or cover substantial quasi - fiscal deficits, in the energy sector in particular heavy damage to infrastructure, especially energy and port infrastructure, which will limit economic activity and put supply - side pressures on prices the continuation of the partial blockade of freight transportation at border crossings with some eu countries, which will depress exports and make imports more expensive the deepening of adverse trends in migration, and the aggravation of the situation in the middle east, which, in particular, increases the risks of possible disruptions to energy supplies and a rise in energy prices for the global economy. at the same time, a number of positive scenarios may still materialize, including further expansion of export opportunities, the transfer of funds from immobilized russian assets to ukraine, the acceleration of european integration processes, and the implementation of a large - scale recovery program. taking into account the balance of risks, as well as favorable macrofinancial trends, in particular better inflation dynamics, the nbu board decided to cut the key policy rate by 1 pp, to 13. 5 %. the previous steps to ease interest rate policy and changes in the operational design of monetary policy gradually decreased nominal yields on hryvnia deposits and domestic government debt securities. at the same time, on the back of the overall improvement in inflation expectations, these instruments remained attractive and in demand. a moderate cut in the key policy rate should not diminish interest in hryvnia assets, as they will continue to protect savings from being eroded away by inflation. the nbu is also cutting the interest rates on overnight certificates of deposit and threemonth certificates of deposit, to 13. 5 % and 16. 5 % respectively. what is more, the nbu is decreasing the interest rate on refinancing loans more pronouncedly – by 2 pp, to 17. 5 %. in the context of the interest rate policy easing cycle, the need to maintain a significant difference between the interest rate on refinancing loans and the key policy rate is diminishing. with

the level of international reserves being sufficient, the situation on the fx market being under control, and there being expectations of further international assistance inflows, the nbu is preparing a number of steps to liberalize the fx market in the coming weeks. these steps will be in line with the strategy for easing fx restrictions, transitioning to a more flexible exchange rate, and returning to inflation targeting. these steps have already been taken into account in the revised macroeconomic forecast, which assumes that international reserves will remain close to their current level this year and next year. the nbu sees some room for the further easing of its interest rate policy, provided that favorable macrofinancial trends continue 3 / 4 bis - central bankers'speeches the baseline scenario of the nbu's forecast envisages a cut in the key policy rate to 13 % this year. this easing of interest rate policy and the planned steps to liberalize the fx market should not pose any additional threats to macrofinancial stability and fx market resilience. at the same time, the nbu will adapt its monetary policy if the balance of risks changes significantly. thus, lower risks to inflation and exchange rate sustainability could create preconditions for further cuts in the key policy rate and an easing of fx restrictions, which would support lending and economic recovery. 4 / 4 bis - central bankers'speeches