The central bank of Ukraine has raised its key interest rate for the first time since Russian troops invaded – and at an unusually high rate.
The monetary authorities announced in Kyiv on Thursday that the interest rate would be raised from 10 to 25 percent.
This is intended to curb high inflation.
The inflation rate has recently reached double-digit percentages, which devalues income and savings.
Russia attacked the neighboring country on February 24 and describes its actions as a special military operation.
"The central bank assumes that the hike will be enough to ease the pressure on the foreign exchange market and stabilize inflation expectations," it said in a statement.
That is the prerequisite for being able to lower the key interest rate again later.
Higher interest rates make a currency more attractive.
This could help "ensure exchange rate stability and contain inflation during the war".
The inflation rate was already in the double digits before the war broke out.
According to estimates by the central bank, it climbed to 16.4 percent in April and to around 17 percent in May.
If the exchange rate of the national currency rises, this makes imports cheaper and can thus dampen inflation.
Because of the war, Ukraine is also under severe economic pressure.
This has already forced 40 percent of companies to close.
At the same time, infrastructure was destroyed, shipping routes blocked and cities reduced to rubble.
In the event of a "protracted conflict without a clear solution", the gross domestic product could collapse by up to 60 percent, predict the economists at the US bank Morgan Stanley.
In this scenario, Ukraine would also lose access to the Black Sea to the south.
The analysts are actually assuming a slump of 39 percent for 2022 - whereby a longer conflict "with decreasing intensity" is assumed.