Ukraine's central bank to continue policy close to "inflation targeting lite" - NBU

MOSCOW. March 15 (Interfax) - The National Bank of Ukraine (NBU) does not intend to return to classic inflation targeting in the near future in the current circumstances, but it will continue to pursue a policy that is close to so-called inflation targeting lite, Ukrainian media reported, citing NBU deputy governor Sergei Nikolaichuk.

"In the current conditions, it's still early to talk about classic inflation targeting. One can say that we are acting more according to the regime of eased inflation targeting, or as it's called in western literature, inflation targeting lite," Nikolaichuk said at a briefing Thursday that was posted on YouTube.

He recalled that the NBU retreated from traditional inflation targeting in early 2022 and switched to a fixed exchange rate, but in June 2023 it approved a strategy to gradually ease currency restrictions and return to a more flexible exchange rate and inflation targeting.

This strategy is being implemented now, gradually shifting the focus of the NBU's efforts to achieving inflation targets, which remain unchanged, with the desired target corridor of "5% plus or minus 1 percentage point," Nikolaichuk said.

"For inflation, we're a little lower than the January forecast [5% as of the end of March]. However, I think it's still fairly early to say that in April we will revise our forecasts for inflation downward," Nikolaichuk said.

The NBU cut its discount rate to 14.5% from 15% on Thursday in a move that was unexpected by the market. In January, the NBU lowered its inflation forecast to 8.6% from 9.8% for 2024 and to 5.8% from 6% for 2025.