KYIV, Sept 9 - Ukraine's central bank raised its main interest rate to 8.5% from 8.0% on Thursday and stood ready to take further steps to tackle persistently high inflation if necessary, Reuters reported.
The hike, the fourth this year, was in line with market expectations. A Reuters poll of analysts earlier this week predicted a rate rise was likely.
"Tighter monetary policy will help rein in inflation expectations and bring back a steady disinflation trend toward the 5% target, which is projected to be met in 2022," the National Bank of Ukraine (NBU) said in a statement.
"If underlying inflationary pressures increase significantly and inflation expectations continue to worsen, the NBU stands ready to take additional measures to return inflation to its 5% target," the statement said.
Under Governor Kyrylo Shevchenko, the National Bank of Ukraine (NBU) began tightening monetary policy in March after bringing interest rates to an historic low last year to support an economy reeling from the coronavirus pandemic.
Inflation accelerated to 10.2% in July, breaching double digits for the first time since 2018, and the central bank said it had likely accelerated further in August.
The central bank had previously signaled a further rate hike to 8.5% though it did not specify when it would come. It has targeted an inflation rate of around 5%.
Ukraine is one of Europe's poorest countries. The government expects an economic bounce back this year, but the central bank has warned about the risks of a resurgent coronavirus and delays in securing International Monetary Fund financing.
Shevchenko has fought off questions about the central bank's independence after his predecessor Yakiv Smoliy resigned last year complaining of political interference and pressure to loosen monetary policy.
Ukraine’s economy will probably grow 3.5% on the year in 2021, not 4.6% earlier expected, reflecting massive deceleration in the second quarter, Tomas Fiala, the head of the Dragon Capital investment bank, said.
The revision comes on the back of a weak economic recovery registered in the second quarter after the State Statistics Service has reported the economy expanded 5.4% on the year, compared with 7-8% expected by analysts. (rt/ez)