Head of the Central Bank of Ukraine, on an effect of the war in the Middle East: “We are walking on a razor's edge”
The rise in oil prices caused by the war in the Middle East risks causing an increase in the inflation rate in Ukraine by 1.5 to 2.8 percentage points, the governor of the Central Bank of Ukraine said on Monday, according to Reuters.
The governor of the National Bank of Ukraine, Andriy Pyshnyi, said the central bank will maintain its goal of reducing inflation to 5 percent within three years, using all available tools to ensure that this goal is met.
“We're trying to walk on a razor's edge,” Pyshnyi said, noting that prices have already started to rise.
Asked if the war in the Middle East would cause the bank to change its economic forecasts, Pyshnyi said the institution he heads had planned meetings for next week to assess the full impact on Ukraine's economy. The war's knock-on effects, including on fertilizer prices, would also be “quite significant,” according to the governor.
Pyshnyi is part of a large Ukrainian delegation attending the spring meetings of the International Monetary Fund (IMF) and the World Bank, hoping to ensure that Russia's war against Ukraine, now in its fifth year, remains on the agenda despite the outbreak of new conflict in the Middle East.
Ukraine's Central Bank governor also welcomed the results of Hungary's election, which ousted Prime Minister Viktor Orban, and said he hoped it would resolve delays in the European Union's 90 billion euro ($105.77 billion) loan to Ukraine.
Orban, Hungary's long-time nationalist leader, whose Fidesz party lost Sunday's parliamentary election to the newly formed center-right Tisza party, had blocked the implementation of the EU loan to Kiev, citing the dispute over the Drujba pipeline, recently damaged by bombing.
Pyshnyi said he will meet with US Treasury Secretary Scott Bessent and other senior US officials on Wednesday, US Congressional lawmakers on Thursday and Federal Reserve Chairman Jerome Powell on Friday.
Meanwhile, Russia's massive attacks on Ukraine's energy infrastructure are expected to hurt economic growth and increase migration flows, the Ukrainian governor also estimated.
Although the government in Kiev expects the flow of migration to turn positive once the fighting stops, Pyshnyi said that prolonging the conflict could complicate the return of some of the roughly 6 million Ukrainians still abroad.
“The longer it takes, the greater the risk that Ukrainians abroad will be assimilated there,” he said.
