. in this light, a decisive rise in the key policy rate will spur investors ’ interest in hryvnia assets, while also easing pressures on international reserves and reining in inflation. the nbu has also decided to widen the interest corridor for monetary transactions with banks to revive the interbank market. more specifically, from 3 june, the interest rate on refinancing loans will equal the key policy rate plus 2 pp, while that on certificates of deposit will be the key policy rate less 2 pp. what result does the nbu expect? the nbu expects that the government and the banks will appropriately respond to the hike in the key policy rate by raising interest rates on domestic government debt securities and deposits. sufficient yields on such assets will prevent household income and savings from being eroded by inflation, while also making hryvnia assets, including domestic government debt securities, more attractive. more attractive hryvnia savings will help decrease demand in the cash segment of the fx market. this will prevent the further accumulation of imbalances, ease pressures on ukraine ’ s international reserves, and will gradually resolve the issue of multiple exchange rates. setting market rates on domestic government debt securities will help increase demand for these assets, while also decrease the need for the nbu ’ s monetary financing. the re - imposition of taxes on imports should be an important step in balancing fiscal and monetary policies. on the one hand, this will secure additional revenues for the state budget, while on the other hand it will increase incentives for domestic producers and ease pressure on international reserves. what will the nbu ’ s monetary policy stance be in future? the nbu expects that a significant rise in the key policy rate, to 25 %, will be sufficient to ease pressures on the fx market, maintain a stable exchange rate, and to stabilize inflation expectations. in future, this will lay the foundations for a monetary easing cycle. thank you for your attention!

kateryna rozhkova : national bank of ukraine press briefing – monetary policy statement speech by ms kateryna rozhkova, acting governor of the national bank of ukraine, at a press briefing on monetary policy, kiev, 31 january 2019. * * * dear colleagues, please be informed that the board of the national bank of ukraine has decided to keep its key policy rate at 18. 0 % per annum. the rate was maintained at the same level in order to drive inflation down to the target of 5 % in 2020. first, let us summarize the inflation development in 2018 : last year, consumer price inflation declined to a five - year low of 9. 8 % ( versus 13. 7 % in 2017 ). the reversal of the trend after the rise in inflation in 2017 is primarily due to the nbu ’ s tight monetary policy. the series of interest rate hikes that started in october 2017 increased the attractiveness of saving. moreover, the tight monetary conditions were among reasons for the strengthening of the hryvnia. high global prices for exported goods, a record harvest of grain crops, and a substantial amount of remittances also contributed to the stronger hryvnia. in addition to monetary factors, an increase in the domestic food supply and lower global prices for food products dampened inflationary pressures. despite having decelerated, inflation was, as expected, above the central bank ’ s target range of 6 % + / - 2 pp at the end of 2018. the deviation from the target was largely due to factors over which monetary policy has only a limited effect : higher administered prices wage - driven growth in production costs crude oil prices rising throughout most of the year a narrowed supply of vegetables due to unfavorable weather. consumer demand, fueled by higher wages, was also an important inflation driver. real wages grew by 12. 5 % yoy in 2018. uncertainty as to whether or not cooperation with the international monetary fund would resume and high external risks also weighed on economic sentiment throughout most of the year. the nbu deliberately chose a more lengthy path to bringing inflation to the target in order to minimize the loss of economic growth. being able to balance the need to drive inflation to the target, and the need to support economic growth, shows the flexibility of the inflation - targeting regime. how will inflation behave in the coming years and when will it meet the nbu target? inflation will continue to decline gradually. as before, we expect inflation