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, 9 december 2021. * * * dear colleagues, please be informed that the nbu board has decided to raise the key policy rate to 9 % per annum. the decision is aimed at neutralizing the impact of additional pro - inflationary risks, improving inflation expectations, and ensuring steady disinflation toward the nbu ’ s target of 5 %. what price dynamics followed the previous nbu board meeting on monetary policy issues? the growth in consumer prices decelerated to 10. 9 % yoy in october. the nbu estimates inflation continued to decline in november. the decline was driven by : the vanished effect of the last year ’ s low comparison base better harvests gathered this year administrative decisions on public utility rates the strengthening of the hryvnia in previous months the impact of the nbu ’ s previous decisions to tighten its monetary policy. at the same time, disinflation was somewhat slower than the nbu had predicted in itsoctober forecast. the decline in inflation was restrained by : higher pressures on prices of an increasingly wider list of consumer - basket goods and services due to the rise in food and energy prices businesses ’ higher expenses on logistics and wages domestic consumer demand remaining robust despite a slight deterioration in consumer confidence and the quarantine restrictions. additional pro - inflationary risks have also materialized. first, rising geopolitical tensions are affecting prices of ukrainian assets and fx market conditions. second, global prices for natural gas and food exceed the nbu ’ s expectations and are likely to remain high in the coming months. third, higher global inflation is prompting leading central banks to step up their monetary policy tightening. in turn, this lowers investor interest in assets of emerging markets ( including ukraine ). moreover, emerging market central banks are also actively raising their rates. for example, yesterday the central bank of brazil hiked its rate by 150 bp, to 9. 25 % per annum. this means the competition for foreign capital is getting stronger among emerging markets. how will prices change further on? inflation will continue to decline gradually until the end of this year and throughout the whole of 2022. 1 / 2 bis central bankers'speeches this year ’ s record - high harvest and a correction in global prices will help decelerate food price inflation

##pan ( 1996 ) said ten years ago, it “ cannot be acceptable in a democratic society that a group of unelected individuals are vested with important responsibilities, without being open to full public scrutiny and accountability. ” transparency is of little use if markets and the public do not believe what a central bank says. credibility is therefore a condition that is a sine qua non for a successful monetary policy. how can credibility be established? alan blinder ( 1998 ) summarises credibility as a " painstakingly built up history of matching deeds to words ". a long history of actually matching deeds to words, of honest communication and a reputation for delivering price stability will therefore ensure central bank credibility. in practice, only a small number of central banks can draw on a sustained history of successful monetary policy, amongst them, the federal reserve, the bundesbank and the swiss national bank. fortunately, in recent years, an increasing number of central banks are rapidly accruing credibility in that painstaking process referred to by alan blinder. 6 when we think about expectations, transparency and credibility in the context of monetary policy, it is important to remember that they cannot and should not be substitutes for action. it is often said that a see for example mckinsey ( 2005 ), where it is shown that the ratio of the global financial stock ( including equity, debt securities and deposits, but excluding real estate ) was roughly three times the size of world gdp in 2003, while it was about equal to world gdp in 1980. the growing importance of balance sheet considerations in monetary policy was noted by alan greenspan in his reflections on central banking at the jackson hole symposium 2005. " in particular, our analysis of economic developments almost surely will need to deal in greater detail with balance sheet considerations than was the case in the earlier decades of the postwar period. the determination of global economic activity in recent years has been influenced importantly by capital gains on various types of assets, and the liabilities that finance them. our forecasts and hence policy are becoming increasingly driven by asset price changes. " in the past 15 years, more than 20 central banks around the world changed their monetary policy framework in favour of inflation targeting strategies. by successfully bringing down inflation and by prioritising communication and transparency, most of these central banks have greatly increased their credibility. high level of transparency in conducting monetary policy means that the central bank has less work to do, because stating clear intentions will induce financial markets to do some of the work