“Stabilizing the macroeconomic situation” is the goal of the next move of the Central Bank of Ukraine. In fact, tomorrow, the main rates will go from 19,5% to 30% in the hope that it will be useful to stop the galloping inflation in the country. The operation, announced today by the Ukrainian Central Bank, is part of a broader plan of financial measures designed to block the devaluation of the currency and the increase in inflation.
The country is in desperate need of funds to avoid bankruptcy. The desperate move by Ukraine's central bank comes as the country awaits the granting of a $17,5 billion loan from the International Monetary Fund.
For several months, the country has been affected by an armed conflict resulting from separatist forces that seek the annexation of Ukraine to Putin's Russia. Geopolitical tensions drove the country's inflation to 28,5% in January on an annual basis. Since the beginning of 2014, the Ukrainian currency, the hryvnia has suffered a catastrophic devaluation which has led to soaring prices.
Inflation in Türkiye
Consumer prices skyrocketing in Türkiye too. As the European Union fights against deflation Ukraine and Turkey try to tackle runaway inflation. In January 2015 consumer prices were at 7,24% and in the following month they recorded a surge of 7,55% compared to the same month of the previous year.
The Turkish Central Bank also intervened last month by cutting interest rates: the one-week repo rate went from 7,75% to 7,5%, the overnight one from 11,25% to 10,75% and that on loans from 7,5% to 7,25%.
