KIEV, Sept. 9 – The shrinkage of banks' liquidity has made possible a reduction in inflation, said National Bank of Ukraine Governor Serhiy Arbuzov.

"Excess cash in the economy in the end results in an increase in a large assortment of consumer goods. It is the measures taken by the NBU that made it possible to reduce demand inflation. The stability of the forex rate of the hryvnia was also conducive to an improvement in the situation with inflation," he said.

As reported, the shrinkage of bank liquidity late in August and early in September translated into a considerable increase in rates on the interbank credit market and kept the forex rate of the hryvnia against the U.S. dollar from weakening. Some experts said that should the situation remain unchanged, it will trigger an increase in rates for loans and deposits in the real sector of the economy.