KYIV (Reuters) -Ukraine’s central bank kept its main interest rate unchanged at 25% on Thursday, saying that inflationary pressure remained high and that an extended full-scale war with Russia was the key economic risk.
In a statement, the central bank said inflation was continuing to grow, but that the growth was slightly slower than its earlier forecast and that inflation would remain under control.
It said the central bank was ready to hike the rate if required and to deploy other measures to protect its international reserves and maintain control over inflation.
“Inflationary pressure remains high,” it said.
“Effects of the war, in particular the destruction of production facilities and disruption of logistics, still have a major impact on prices of almost all goods and services in the consumer basket,” the central bank said.
Buffeted by Russia’s Feb. 24 invasion, Ukraine’s government has forecast an economic contraction of 30-35% this year, while forecasts for gross domestic product in 2023 range from a further contraction of 0.4% to an expansion of 15.5%.
Inflation rose to 22.2% year on year in July and reached around 23% in August, the central bank said.
(Reporting by Max Hunder and Pavel Polityuk; Writing by Tom Balmforth; Editing by Jon Boyle, Alexandra Hudson)
