Ukraine's NBU monetary policy committee members unanimously support keeping key policy rate at 25%

MOSCOW. Oct 31 (Interfax) - Keeping the key policy rate at 25% by the National Bank of Ukraine (NBU) was backed by all of the ten members of the monetary policy committee at a meeting on October 19, the NBU website said on Monday.

"Taking into account the balance of risks, for the third time in a row the members of the committee unanimously spoke in favor of maintaining the rate at the level of 25%. The participants in the discussion noted that this decision takes into account both the proximity of actual inflation to the forecast indicators and market expectations for the rate, as well as the still shifted upward balance of inflationary risks," the press release said.

The participants noted that the inflation in recent months was slightly lower than expected, and economic activity was slightly higher, it said.

They noted that maintaining a high level of the refinancing rate was necessary for making the hryvnia assets even more attractive and easing pressure on the forex market.

The members of the committee agreed that this would make it possible to continue to keep inflation expectations and processes manageable and ensure a slowdown in the inflation rate as early as next year.

Several participants noted that inflationary pressures have already been showing the first signs of stabilization, in particular, as evidenced by the slowdown in inflation expectations of the majority of respondents.

At the same time, these indicators should be taken cautiously, as the transition of the crisis into a protracted stage, fragile exchange rate and inflation expectations, and inflationary pressures increase the risk of a further inflationary spiral.

The members of the monetary policy committee agreed that new measures to protect international reserves and enhance the transmission should be introduced.

The committee also highlighted the positive impact of the previous measures to adjust the forex restrictions, in particular, the forex purchase deposit.

The NBU noted that all of the committee members expect that in order to preserve the macro-financial stability, the NBU will continue to pursue a relatively tough monetary policy for a long time to come.