NBU hopes for govt to take its inflation targets into account

 The National Bank of Ukraine is counting on the government and other authorities to support its monetary policy, which is the basis for ensuring price stability and is aimed at achieving inflation at a level of about 5% in 2027, said Serhiy Nikolaychuk, First Deputy Governor of the NBU.

"It's about trust in our forecasts and policies. We hope that not only the IMF and financial analysts will believe in our goals and actions to achieve them, but also the government will focus on our goals in its inflation forecasts," he said in an interview with Interfax-Ukraine.

Nikolaychuk considers the National Bank's proposals to directly help reduce prices for individual goods questionable, while he drew attention to the fact that in recent years quite a few shocks have been implemented on the supply side, primarily food.

"Partly this was related to the weather. To some extent, we are also already experiencing these structural climate changes. Therefore, the urgent task for the future is the maximum adaptation of the government and business to these changing climatic conditions: the creation of irrigation and logistics capacities that will avoid fluctuations in production and harvests," the banker noted.

Commenting on the recommendations in the inflation report not to postpone the return of market prices for the population for utilities and energy for too long, he noted that the National Bank wants to achieve inflation targets not through their administrative containment, but through a correct, balanced, consistent monetary policy.

"Of course, it will be much easier for us if we do not have sharp price jumps in other areas... If some tariffs do not change for several years, and then they increase several times, then this is not the situation that allows us to properly manage inflationary processes," Nikolaychuk emphasized.

Speaking more specifically about the adjustment of prices for housing and communal tariffs, he pointed out that today's price subsidization is quite expensive for the state, which creates additional pressure on the budget and quasi-budgetary balances.

"Therefore, sooner or later it will still have to be leveled. In our opinion, greater predictability of policy in this area would help us, among other things, better anticipate and manage inflationary processes," the banker concluded.