The National Bank of Ukraine kept the key policy rate unchanged at 13%.

This decision will contribute to the gradual return of inflation to the 5% target in the following years and support the foreign exchange market’s stability, the NBU reported. It is also aimed at maintaining interest in hryvnia savings and curbing demand on the foreign exchange market. These are the key risks for inflation dynamics and economic development during the full-scale war:

1. emergence of additional budgetary needs
2. additional tax increases are possible, which will increase price pressure
3. further damage to infrastructure, primarily energy and port infrastructure, will limit economic activity and pressure prices from the supply side
4. deepening of negative migration trends and further expansion of labor shortage in the domestic labor market

Uncertainty also surrounds the future volume of international partners’ support for Ukraine and whether immobilized Russian assets will be transferred to Ukraine.