October 25, 2018 / 11:29 AM / a year ago

UPDATE 1-Ukraine central bank warns on inflation after keeping key rate unchanged

(Adds details, background)

KIEV, Oct 25 (Reuters) - The Ukrainian central bank kept its benchmark interest rate unchanged at 18 percent on Thursday but warned of a possible hike further down the line if rising inflation pressures did not ease.

It raised its 2018 and 2109 inflation forecasts to 10.1 percent from 8.9 percent and 6.3 percent from 5.8 percent, respectively.

In a statement, it said inflation expectations have worsened and getting price moves down to its target level would take more time, citing rising oil prices, wage growth and external conditions as the main risks.

The bank also gave higher than previously projected estimates for Ukraine’s current account deficit in 2018 and 2019. But it kept its forecast for economic growth unchanged at 3.4 percent in 2018 and 2.5 percent in 2019.

It said its projections were contingent on Ukraine securing aid from the International Monetary Fund, which last week agreed to disburse more financial assistance provided Kiev fulfilled certain conditions, including passing a balanced budget.

The new IMF deal worth $3.9 billion is designed to help Ukraine maintain financial stability and the trust of investors as it heads into a choppy election period next year. (Reporting by Natalia Zinets; writing by Matthias Williams; Editing by Robin Pomeroy and Hugh Lawson)

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