A new NBU strategy: another inflation targeting?

May 24, 2023

The National Bank of Ukraine presented a new Strategy of implementing the post-war monetary policy and its own development. Of course, the main declared tasks of the Strategy are financial stability and restoration of the country. For this reason, 5 lines are named, intended to ensure stability of the national currency, usage of the financial system for the country restoration, institutional strengthening of the central bank, etc. 

However, the present period and the recovery process require wider goals and objectives. It is not enough to care about "return to inflation targeting" or "efficiency and customer-oriented cash circulation", or other really important tasks and functions. As before, the most important thing is missing: the NBU's willingness to share responsibility for economic growth with the government.

The main mandate of the NBU today is incomplete if the goal of supporting economic growth and job creation is absent (while maintaining price and financial stability), and transition to an accommodative monetary policy (with lower interest rates) is postponed until later “stabilization”.

There is however a hint in clause 3.1.4 (section 3.1. - "Responsible financial market") on "implementation of a sustainable financing policy". However, it is hard to guess what is meant, since there is no clarification (the vast majority of other program tasks contain quite clear details).

Instead, practical implementation of the NBU policy of short-term support and recovery of the economy requires a clear focus on:

- the NBU's rejection of the ideology of "inflation targeting", which contradicts the Ukrainian economic realities and has brought discredit upon itself;

- reduction of the discount rate to the level of the inflation target at the year end (zero real discount rate) (which will make hryvnia loans cheaper for businesses, reduce inflation, and boost business profits);

- strict control over the use of refinancing loans, a ban on their transfer to foreign exchange markets.

And one more line of action, which is probably considered no longer relevant. It is about the need to analyse the situation in the banking sector, first of all, in terms of unjustified bankruptcies of individual banks, as well as excessive enrichment of some others in 2014-2017. At the same time, the goal of restoring the business reputation of the banks themselves and their managers, who suffered as a result of dubious actions, should be pursued. This would be a positive signal for both domestic businesses and international investors, that the banking system of Ukraine is being institutionally renewed and truly depoliticized, introducing clear and civilized rules of the game.



Vasyl Yurchyshyn

Director, Economic Programmes

Born in 1955 in Kamyanets-Podilskyi.


T. Shevchenko Kyiv State University, Department of Cybernetics (1977).

Institute of Public Administration and Local Government at the Cabinet of Ministers of Ukraine (1994).

Professor in Public Administration. Author of nearly 100 scientific works.


In 1977–1993, worked at the Kyiv University as an engineer, research fellow and senior research fellow;

1994–1999 — head economic researcher at the International Centre for Policy Studies, Fund for Banking and Finance Development;

1999–2004 — Assistant Professor, Department of Economic Policy of the Ukrainian (currently, National) Academy of Public Administration, office of the President of Ukraine;

1999–2004 — Research Director at the Agency of Humanitarian Technologies, later — Agency for Social Analysis;

2002–2003 — advisor to the Minister of Economy of Ukraine;

since April, 2004 — Professor, Department of Economic Policy of the National Academy of Public Administration, office of the President of Ukraine;

since June, 2005 — Economic Programmes Director at Razumkov Centre.

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