KYIV – Ukraine’s central bank kept its main interest rate unchanged at 25% on Thursday, but said that economic risks remained elevated following a series of Russian missile attacks on the country’s energy infrastructure.
The interest rate has been at 25% since June and central bank officials have repeatedly said they aim to keep it at that level until 2024. The central bank also said consumer inflation sped up to 26.6% in October year-on-year.
The statement released after the central bank’s final monetary policy meeting this year said continued international financing was a key prerequisite for economic stability. The level of international financial aid will reach $31 billion this year, the central bank said.
“The main risks for economic development are a longer period of full-scale military aggression by Russia, as well as a further increase in terrorist attacks against critical infrastructure facilities,” the statement said.
Russia, which invaded Ukraine in February, has increased attacks on energy facilities in recent weeks, with most of the country experiencing severe energy shortages and long blackouts.
The central bank’s current forecast sees Ukraine’s GDP falling by 31.5% this year. The bank expects the economy to return to growth in 2023 with GDP rising by 4%.
The International Monetary Fund expects Ukraine’s GDP to fall by 35% this year and that the economy will stabilize next year.
The central bank also said it was increasing obligatory reserve requirements for commercial banks by five percentage points.
