By Olena Harmash
KYIV, April 30 (Reuters) - Ukraine's central bank kept its key rate on hold on Thursday and said the country's economic growth would be slower and inflation higher this year due to Russia's bombardment of energy infrastructure and the impact of the Iran war.
Central Bank Governor Andriy Pyshnyi said the main interest rate would remain unchanged at 15%, adding that the bank was ready to keep the rate on hold until the second quarter of 2027.
A poll by ICU, an investment bank in Kyiv,
showed that a majority of market analysts and economists had expected the rate to remain unchanged.
"The consequences of Russian aggression remain the main risk to inflation dynamics and economic development. But other geopolitical developments, particularly in the Middle East, will also have a significant impact," Pyshnyi told reporters.
UKRAINE'S ECONOMY STRUGGLES DURING THE WAR
As Ukraine's economy struggles in the fifth year of the war with Russia, the central bank downgraded its forecast for gross domestic product growth to 1.3% in 2026, down from a previous estimate of 1.8%.
The central bank estimated that Ukraine's economic growth had slowed to 0.2% year-on-year in the first quarter of this year due to Russia's attacks on the energy and logistics infrastructure during a severe winter.
Ukrainian officials said Russia fired nearly 19,000 drones and more than 700 missiles at Ukraine during the three months of winter, from December to February. The attacks plunged millions of people into darkness and disrupted heat and water supplies in Ukraine's capital, Kyiv, and other major cities.
Pyshnyi said the difficult situation in the Ukrainian energy sector, and also rising fuel prices caused by the Iran war, had fueled consumer price inflation. The central bank revised its inflation forecast for this year to 9.4% from 7.5% previously.
He said inflation would remain around current levels in the coming months but would accelerate in the second half of the year as production costs were expected to grow due to the rising fuel prices.
Consumer inflation was at 7.9% year-on-year in March, data showed.
Ukraine depends heavily on imports for its diesel and gasoline needs. Russian attacks have destroyed virtually all of Ukraine's domestic oil refining capacity.
(Reporting by Olena Harmash. Editing by Gareth Jones)
