The board of the National Bank of Ukraine (NBU) has decided to keep the refinancing rate at 17.5% per annum.

"The decision was required to neutralize inflation risks, which have increased since the previous decision taken in April, and to attain the 5% inflation target next year," the NBU said on its website.

"Consumer price inflation has been above the NBU's forecast for two months running. In April, its annual reading was 8.8% and it continued to accelerate in May, according to NBU estimates. However, the acceleration is mostly driven by temporary factors, which include higher prices for some vegetables and fuel," the report says.

"Underlying inflationary pressures continued to decrease gradually. This is reflected in core inflation declining since the start of the year, which is in line with the NBU's forecast. Inflation expectations have also improved a little," according to the document.