The National Bank of Ukraine (NBU) raised the key policy rate by 100 basis points, to 10% per annum from the current 9%, according to a report on the NBU website.

"The Board of the National Bank decided to raise the key policy rate to 10% per annum. The implementation of a significant number of pro-inflationary risks requires strengthening the monetary policy of the NBU to improve inflationary expectations and ensure a steady decline in inflation to 5%," the bank said in the report.

The regulator expects the key policy rate to remain at or above the neutral level this year and in the subsequent years.

According to the press release, the escalation of the military conflict by Russia and a longer and more significant price surge in the world than previously expected remain the key risks for the forecast.

In addition, inflationaryrisks are the likely formation of additional devaluation and price pressure as a result of worsening terms of trade or a sharp reduction in harvests after last year's records, an increase in consumer prices due to an increase in business costs for wages due to a revival of labor migration, as well as a rapid change in administratively regulated tariffs.

Taking into account the existing inflationary risks, the National Bank will continue the cycle of strengthening monetary policy and is ready to act decisively in the event of further implementation of inflationary factors.