The Board of the National Bank of Ukraine (NBU) has decided to keep the key policy rate at 13%

The regulator explained that this decision is aimed at ensuring the stability of the foreign exchange market and bringing inflation closer to the target of 5% over the forecast horizon. The NBU also noted that the duration and nature of Russian aggression will continue to significantly impact inflationary processes and Ukraine's economic development. A prolonged high-intensity war will complicate the economy's return to normal functioning and prevent inflation from stabilizing at the NBU's target level.

Other risks remain, most of which are also related to the course of the war:

• Emergence of additional budgetary needs, primarily to support defense capabilities;
• The potential passing on of certain new business taxes, which are currently being discussed at the state level, to prices;
• Further damage to infrastructure, particularly energy and ports, which will limit economic activity and put supply-side pressure on prices;
• Deepening negative migration trends.

The minutes of the Monetary Policy Committee's discussion, which preceded this decision, will be published on August 5, 2024. The next NBU Board meeting on monetary policy issues will be held on September 19, 2024, according to the approved schedule.