Ukraine: Central Bank decides to maintain in December
Latest bank decision: At its meeting on 11 December, the Central Bank decided to keep its key policy rate unchanged at 15.50% per annum.
Monetary policy drivers: The decision to maintain the interest rate was primarily driven by the need to manage inflation, which, although declining somewhat faster than forecasted, remains high with inflation expectations still elevated. This situation was influenced by an increase in food supply due to new harvests, but sustained high inflation expectations among economic agents and increased household focus on inflation indicate persistent inflationary pressures.
Policy outlook: The Central Bank provided forward guidance that it will respond flexibly to future changes in the distribution of risks to price dynamics. It indicated readiness to maintain or tighten the current interest rate policy if inflationary risks persist or intensify, especially due to uncertainties around external financing. Conversely, a weakening of inflationary risks could trigger the start of an interest rate easing cycle, in line with the baseline scenario of their October macroeconomic forecast.