Ukraine central bank keeps key rate at 6% despite rising inflation

KYIV: Ukraine's central bank kept its key interest rate at a historically low 6% as expected on Thursday, supporting a virus-hit economy despite rising inflation.

The decision is in line with a Reuters poll published this week, in which a majority of analysts expected the rate to remain the same.

"Further on, the central bank will aim its monetary policy at striking the right balance between responding to inflation risks and supporting economic recovery," the National Bank of Ukraine said in a statement.

The NBU stood ready to raise its key policy rate in the future to bring inflation back to its target of around 5%, it added.

The central bank gradually brought the rate down to 6% in June 2020 from 18% in April 2019.

Ukraine's economy ministry said the economy may shrink 3% in the first quarter of 2021 because of tight lockdown restrictions that took effect this month to prevent a spike in coronavirus infections.

In 2020, the economy declined by 4.4%, according to the central bank's estimate.