You're reading: Maximum possible reduction in inflation this year’s key task of monetary policy

The government's current forecast for 2015 consists of three scenarios with December-over-December inflation: 26.7 percent, 38.1 percent and 42.8 percent, but none of the figures could be used as the target of the monetary policy, as even the lowest rate is at variance with the notion of price stability, according to the Council of the National Bank of Ukraine (NBU).

“Under such conditions, the key task of the monetary policy for 2015 is to rein in year-over-year inflation as much as possible to break its spiraling dynamics and lay the basis for achieving the medium-term goal (from three to five years): a decline in inflation to 5% per year with a possible deviation by one percentage point up or down,” the NBU Council announced in the updated monetary policy guidelines for 2015.

According to them, the quantitative criteria of efficiency and indicative targets of the program of cooperation with the International Monetary Fund for net international reserves, net domestic assets and monetary base will be used as the operational targets of the monetary policy.

“Among the National Bank’s objectives are also measures to stabilize the banking system and maintain economic growth if this does not create obstacles to ensuring price stability,” the document published by the NBU on Wednesday reads.

As reported, the NBU”s monetary policy guidelines for 2015 approved in September 2014 foresaw the following year-over-year increase in consumer prices: 9 percent by the end of the current year, 7 percent in 2016, and 5 percent in 2017.

Inflation as of the end of March 2015 was 45.8 percent, this was the highest rate since November 1996, while the National Bank projects it won’t exceed 30 percent by the end of 2015.