Ukraine: interest rates have been raised from 10% to 25% – the highest in Europe

The Central Bank of Ukraine, groaning under the Russian invasion, has raised the country’s interest rate from 10% to 25% – the highest rate in Europe today.

According to the BBC, the aim of the move is to slow rising inflation and prevent further deterioration in the local currency, the hryvnia (hryvnia).

Since Russia’s invasion of the country in February, many businesses have closed and supply chains have been cut short. as per World Bank forecastUkraine’s economy is expected to shrink by 45% this year.

Lesson Inflation In the Eastern European country, it jumped by 17% and is even expected to reach 20% this year, according to the Central Bank of Ukraine. It has also been reported that raising interest rates will help protect the savings of citizens eroded by inflation. The bank also expressed hope that the hryvnia currency, which traded today (Friday) around more than 29 hryvnia for the dollar, will enter a stabilization trajectory.

This is the first rate hike in the country since Russia’s invasion, and the central bank has signaled that it will move to a rate cut once inflation is under control.

To date, more than $ 100 billion in infrastructure damage has been inflicted on Ukrainian cities as a result of Russian attacks, and 14 million civilians have been forced to flee their homes.

At the same time the government was forced to increase its spending to support the affected civilians and meet the needs of the military. This increased the budget deficit by 27% to $ 7.7 billion in May, according to Dragon Capital Investment Bank, based in Kiev.

Another economic blow that has hit Ukraine stems from the fact that the country’s banks will have to absorb the possibility that loans to businesses in territory now under Russian control will never be repaid.