The Board of the National Bank of Ukraine (NBU) has decided to leave its key policy rate unchanged at 6%, according to a posting on the website of the central bank on Thursday.

"The Board of the National Bank of Ukraine has decided to keep its key policy rate at 6% per annum. The sustained monetary policy easing is aimed at supporting economic recovery and bringing inflation to the target," the NBU said.

The NBU said that in September, inflation remained below the target range of 5%+/-1 pp. Consumer inflation declined to 2.3% year-on-year on an increase in food supply.

"This has offset the opposite pressure on prices from other factors, such as the hryvnia depreciation, higher energy prices, and a recovery in economic activity and consumer demand," the regulator said, adding that such balanced effect of mixed factors is temporary.

According to preliminary data of the NBU's online monitoring of prices, inflation somewhat accelerated in October.

Although the hryvnia depreciation had a minor pass-through effect on prices, inflation expectations of businesses and households also continued to deteriorate. Moreover, the consumer sentiment index improved.

According to the report, with the high level of uncertainty, the NBU's future monetary policy will mainly depend on how the pandemic develops and what budgetary parameters are adopted.

If the pick-up in domestic demand and business activity fails to persist due to an increase in the number of COVID-19 cases, the NBU will be able to support the economy by cutting its key policy rate further. Conversely, the NBU will also be prepared to raise the key policy rate in 2021 if inflationary pressures intensify.

"The NBU will continue to keep a balance between stimulating the economy and maintaining moderate inflation. The NBU's decisions will also be largely guided by the established parameters of fiscal support for the economy. This support is also expected to be significant next year," the bank said.