Affiliation:
1. International European University
Abstract
Introduction. Monetary policy serves as a fundamental component of the economic strategy of the National Bank of Ukraine (NBU), focused on ensuring price stability and fostering an environment conducive to economic growth, development, and increased employment levels within the country. Following the onset of large-scale military occupation in Ukraine, which inflicted significant damages on the national economy and disrupted international trade, the NBU has been compelled to take decisive actions. These measures aim to minimize the severe impacts of military operations on Ukraine’s banking and monetary systems and address multiple emerging challenges.
The purpose of this paper is to explore the approaches of the NBU's monetary policy aimed at curbing inflation and preventing the rapid devaluation of the hryvnia during wartime conditions.
Results. The strategy pursued by the NBU is directed towards securing both price and financial stability, which are essential for macroeconomic stability. The current state of Ukraine’s monetary policy reveals several institutional challenges, including unstable exchange rates, hryvnia devaluation, an expansion of the shadow economy, and a high volume of currency transactions within the country. During the conflict, the monetary and credit policies of the NBU prioritize fulfilling Ukraine’s defense needs, ensuring the functionality of financial markets, maintaining the smooth operation of banking and payment systems, controlling inflation, stabilizing the hryvnia, and safeguarding necessary levels of international reserves.
Conclusions. A key mechanism for the NBU’s influence on inflation in Ukraine is the primary interest rate, which determines the rate at which the NBU provides funds to financial institutions. This key rate significantly impacts the interest rates commercial banks offer to individuals and enterprises, which in turn affects the inflation level.