yakiv smolii : national bank of ukraine press briefing - monetary policy statement speech by mr yakiv smolii, governor of the national bank of ukraine, at a press briefing on monetary policy, kyiv, 5 september 2019. * * * dear colleagues, the board of the national bank of ukraine has decided to cut the key policy rate to 16. 5 % per annum, effective 6 september 2019. the nbu is continuing the cycle of monetary policy easing, as it expects inflation to decline to the target of 5 %. what inflation developments followed the last monetary policy meeting? despite seasonal decrease of prices in july, inflation in annual terms was higher than our forecast and made 9. 1 % the nbuestimates inflation to have declined in august, although still remaining above the forecast level. the deviation was mostly driven by temporary factors related to food supply, in particular the supply of vegetables. meanwhile, core inflation was 7. 4 % was in line with the nbu ’ s forecast. the tight monetary policy continued to hold back the underlying pressures on prices, in particular through the exchange rate channel. the appreciation of the hryvnia had the strongest impact on prices of fuel and some food products. however, disinflation was restrained by the greater consumer demand and the rise in real wages by almost 10 % over the year. what are the future inflation developments? the nbu reiterates its forecast that inflation will meet the 5 % medium - term target at the end of next year. macroeconomic factors in place since the previous monetary policy meeting of the nbu board have not changed the balance of risks to the forecast. on the one hand, according to the nbu ’ s estimates, a strengthening in the exchange rate will help curb inflation in the next few months. the hryvnia appreciation was driven by fundamental market factors, such as : favorable global commodity prices good harvest of grain crops continued growth in it services exports a stronger investor confidence in the ukrainian economy the simplified access to the domestic government securities market for investors. that reduced the amount of repatriated dividends and spurred demand for domestic government bonds. although the impact of foreign capital inflows on the domestic government bond market weakened substantially over past weeks, the foreign exchange market has remained in balance. the current drop in global oil and gas prices will be translated to domestic prices, with a certain time lag. on the other hand, the rapidly rising domestic demand and strong wage growth will

, such as stress tests. the ngfs scenarios provide a good starting point. final considerations • despite the stronger economic recovery expected in 2021, the pandemic has left important economic challenges. • our societies and economies face multiple scars and pressing concerns. policy space is more limited and idiosyncratic social and structural challenges hamper development and constrain decision making. • the magnitude of the challenges that central banks face cannot be overstated. we need to recognize the urgency to work creatively and cooperate effectively, in order to attain a broad shared vision of the future and the roadmap to attain it.