Seven of NBU Monetary Policy Committee's 11 members back 1pp key policy rate hike

MOSCOW. March 17 (Interfax) - Seven members of the 11-strong Monetary Policy Committee (MPC) of the National Bank of Ukraine (NBU) on March 5 approved a proposed key policy rate increase by 1 percentage point from 14.5% to 15.5% from March 7, while the other four committee members were in favor of a 0.5 pp raise, Ukrainian media said, citing MPC meeting results published on Monday.

"The NBU must act with resolve and reaffirm its commitment to its mandate to ensure price stability in order to maintain confidence in monetary policy. The 1pp hike in the key policy rate in March corresponds to the trajectory of the January macro forecast's baseline scenario and [...] expectations of most financial market participants," the majority of the committee's members said.

According to the meeting minutes, MPC members believe that the set of measures implemented by the NBU in March will be sufficient to deal with the current price surge and reverse the inflation trend and will also enable the NBU to return to easing its interest rate policy as soon as this year.

"However, most MPC members also said that, because the balance of inflation risks is shifted upward, the NBU should be prepared to hold the key policy rate at the current level for longer or even to further tighten interest rate policy if risks to price developments and inflation expectations materialize or intensify," the committee said.