is made in overcoming the pandemic. 1 / 3 bis central bankers'speeches factoring in losses to the economy caused by the tightening of quarantine restrictions, the nbu downgraded its gdp growth forecast for 2021 to 3. 8 %, down from 4. 2 %. the ukrainian economy will grow at a pace of around 4 % in 2022 – 2023. the current account is expected to return to a slight deficit in 2021, propelled by higher domestic demand and the gradual revival of international tourism. the current account deficit will widen noticeably in 2022 – 2023, propelled mainly by : less favorable terms of trade for exporters of agricultural and metallurgical products the expected drop in earnings from gas transit and continued growth in consumer and investment imports, fueled by the complete recovery of the global and ukrainian economies from the coronavirus crisis. under what conditions would this forecast be realized? the primary assumption of the nbu board is that ukraine will continue to cooperate with the imf. the nbu expects that ukraine will make further progress in its talks with the imf. cooperation with the imf and other international partners will enhance the government ’ s ability to support the economy during the crisis, while also helping ukraine pass through the period of debt repayments that will peak in the coming autumn. this cooperation will help maintain ukraine ’ s international reserves at a reasonably high level of usd 29 to 30 billion in 2021 – 2023. the key risk to the macroeconomic forecast is the imposition of stricter quarantine measures in ukraine and globally, and the slow pace of the vaccination campaign domestically. new waves of the pandemic forced countries to once again tighten quarantine restrictions in q1 2021. despite the partial adaptation of businesses to the new conditions, this is slowing the recovery of business activity. the slow pace of the vaccination campaign in ukraine, coupled with higher inflationary pressures arising from the rebounding global economy, poses an additional risk of future economic losses. there are other significant risks. they include : an escalation of the military conflict in eastern ukraine or on the country ’ s borders volatile global capital markets and a dramatic deterioration in the terms of trade. taking into account all of the above, the nbu board decided to raise the key policy rate to 7. 5 %. how does the nbu intend to change the key policy rate in future? the nbu ’ s forecast envisages that the key policy rate will

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.