Page 23 - UKRRptAug18

4.2 Inflation
Prices 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F
CPI headline (%YoY, 16.6 22.3 12.3 9.1 4.6 -0.2 0.5 24.9 43.3 12.4 13.7 9.4 eop)
CPI headline (%YoY, 12.8 25.3 16 9.4 8 0.6 -0.3 12.1 48.5 14.9 14.5 9.2 average)
PPI (%YoY, eop) 23.2 21.1 15.3 18.8 17.4 0.4 1.7 31.8 25.4 35.7 16.5 9
PPI (%YoY, 20.5 33.6 7.4 21.4 19.9 6 -0.1 17 36.5 20.4 27.2 10.6 average)
Source: ICU, CEIC
The council of the National Bank of Ukraine (NBU) has approved the regulator's monetary policy strategy , the central bank said in a statement on July 16.
According to Ukrainian legislation, the main tasks of the NBU's council are to develop monetary policy guidelines and exercise control over monetary policy implementation. The council also oversees the regulator's internal control system.
The document prescribes an inflation-targeting regime as a pre-condition for the sustainable macroeconomic development of Ukraine. According to the NBU's governor Yakiv Smoliy, the regulator's board and council have a "common vision" regarding mid-term monetary policy. Consistent and predictable monetary policy should result in price stability in the country.
The document reconfirms key elements of the inflation-targeting regime and settles major goals of monetary policy in the mid-term. At the same time, the specific monetary policy tools are to be reviewed every year in order to comply with current external and internal macroeconomic risks.
The mid-term policy goal — consumer inflation of 4-6% — should be reached by the end of 2019. Afterwards, a goal of 5% should be maintained, though the goal could be revised downward.
The NBU is aware that inflation could deviate from the target due to factors that are beyond the influence of monetary policy. In this case, the NBU should use monetary instruments in order to return inflation to the target level, the strategy says.
The strategy also underscores the need for the institutional independence of the central bank. In this context, the NBU should refrain from any maintenance of fiscal outlays.
"It is important that the NBU’s commitment to an inflation-targeting regime finds support from the NBU's council," Evgeniya Akhtyrko at Kyiv-based brokerage Concorde Capital wrote in a research note on July 17. "As presidential and parliamentary elections scheduled for 2019 approach, the
23 UKRAINE Country Report August 2018 www.intellinews.com