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Economy Ministry expects inflation of about 10% in 2021, notes low efficiency of its regulation by key policy rate
KYIV. Sept 24 (Interfax-Ukraine) – The Ministry of Economy expects inflation to remain at around 10% by the end of 2021 and considers it safe for economic development, according to the August inflation review published on Friday.
"Even taking into account the unexpectedly high level of growth in global energy prices, we have to consider the fact in the absence of new challenges for the economy, the inflation rate is likely to be close to 10%, which in fact does not bear any signs of inflation-destructive impact on the positive achievements of economic development," the ministry said.
According to the ministry, now, the current price pace is consistent with the forecasted general current trend for relatively higher inflation rates than in the previous year.
"We think that attempts to curb inflation, which is formed mainly by the world prices, using the traditionally narrow tools used in the inflation targeting, namely the key policy rate, are still ineffective," the Ministry of Economy said.
The ministry said that the restriction of the money supply and the steady increase in the cost of funds can lead to the manifestation of monetary hunger and will have a devastating effect on the pace of economic recovery now taking place in Ukraine.
The Ministry of Economy said that in an effort to curb inflation, the NBU continues implementing a tighter monetary policy than in the previous year, which, in addition to the increase in the key policy rate, was expressed in moderate growth rates of money supply. The money supply since the beginning of the year has grown by only 2.9% (by 16.4% in January-August 2020).
