rates on hryvnia term household deposits. yields on hryvnia instruments exceeded current and expected inflation. as a result, hryvnia term household deposits and households'investments in domestic government debt securities continued to rise, which was in line with the nbu's tasks. in view of the expected acceleration of inflation in 2024 and the upward shift of the balance of risks, the nbu considers it appropriate to keep the key policy rate unchanged. this will help maintain the attractiveness of hryvnia instruments, which will limit demand on the fx market, while also helping the nbu to discharge its mandate for 3 / 4 bis - central bankers'speeches safeguarding exchange rate sustainability. in addition, the nbu will maintain an active presence on the fx market to smooth out excessive exchange rate fluctuations within the scope of the managed exchange rate flexibility regime. in turn, maintaining exchange rate sustainability will remain an important tool for keeping 2024 inflation and inflation expectations in check, and for bringing inflation to its target range in 2025. the baseline scenario of the nbu's forecast, which assumes that ukraine will receive sufficient international financing and that security risks will subside from next year, provides for a slight reduction in the key policy rate starting in h2 2024. at the same time, the nbu will adapt its monetary policy if the balance of risks for inflation and exchange rate sustainability changes. any further decisions on the key policy rate will depend on inflation dynamics, the state of the fx market, the regularity of international aid inflows, the evolution of security risks, and other factors. 4 / 4 bis - central bankers'speeches

sidestep the conventional crises often faced by small, open economies. while it may seem that the recent global inflationary wave has been effectively tackled, with central banks successfully navigating the challenge, a new set of challenges arises due to the high stakes of losing control over inflation. according to the imf projections, global inflation is expected to decelerate to 6. 9 % in 2023 from 8. 7 % in 2022, further dropping to 5. 8 % in the following year. the anticipation is that most central banks will achieve their inflation targets by 2025. even in ukraine, amidst a war and active military operations, we have managed to bring inflation close to our target of 5 %. however, can we afford to let our guard down? i am convinced that the answer is no. the noticeable slowdown in inflation sets the stage for nuanced discussions regarding the pace of monetary policy normalization and the support of economic growth across different countries globally. central banks find themselves at a crossroads : what is the greater risk a€ “ being too cautious or not cautious enough? what is the comparative cost of overly tight policies versus excessively loose ones? domestically, we are actively engaging in these discussions. overly strict monetary policy in a low inflation environment can detrimentally impact certain economic sectors and hinder overall growth, especially during times of war. simultaneously, inflation risks tied to resurging consumption and uncertainties in commodity markets remain elevated. given these circumstances, a premature shift to interest rate easing poses substantial risks to the entire macroeconomic system and the broader economy. we recognize that this challenge extends beyond ukraine and is relevant to the majority of central banks worldwide. each of us understands the potential cost of missteps and acknowledges that a return to high inflation poses risks of destabilizing inflation expectations, eroding trust, and reverting to an era of elevated inflation. complicating matters further is the difficulty in gauging the full impact of policy measures already implemented in individual countries, as policy transmission takes time. consequently, most central banks today adopt a cautious approach, characterized by vigilant observation and preparedness for active response. it appears that forward - thinking central banks in emerging markets are presently adhering to a strategy of prudent policy. the national bank of ukraine is also adhering to such a strategy. despite the temporary pause in inflation targeting, we remain steadfast in our commitment to ensuring price and financial stability and promoting sustainable economic