Defying expectations, Ukraine’s central bank decided yesterday to keep the nation’s prime rate at 7.5%

. After May inflation came in at 9.5% yoy — the second highest in Europe after Turkey’s — most economists interviewed by Bloomberg expected a hike. At two previous meetings – in March and April – the Board of the National Bank of Ukraine hiked the rate. The next meeting is July 22.

Facing stagflation – stagnant growth and 9.5% inflation – analysts are split on whether Ukraine’s central bank will raise its prime rate tomorrow, or keep it at 7.5%

, a Reuters poll indicates. The government had forecast a 4% growth spurt in 2021, but the economy shrank 2% in the first quarter. Seven out of 15 analysts polled by Reuters think high inflation will prompt the National Bank of Ukraine to raise the rate to 8% or 8.5%.

Surprising analysts, the Central Bank raised Ukraine’s prime rate by a full percentage point, to 7.5%.

By bringing Ukraine’s key rate back to where it was one year ago, the National Bank of Ukraine said it wants to tamp down inflation.