ACTUAL ISSUES OF MONETARY POLICY TO ENSURE RECOVERY AND SUSTAINABLE GROWTH OF THE UKRAINIAN ECONOMY

Abstract

The article covers the issues of the monetary policy modernization in Ukraine. Particular attention is paid to the issue of ensuring the optimal interrelations between the inflation target and benchmark for real GDP growth. Authors argue that strict parameters of inflation targeting through 2017-2019 were counterproductive, since they were implemented under the critically low level of household savings (in 2019 - negative savings) and, together with other factors, led to a critical reduction in aggregate demand, a slowdown in economic activity and a decrease in the GDP’s monetization ratio. Based on the empirical data, authors suggest that a reasonable benchmark for medium-term growth of real GDP in Ukraine is 6% per year. The authors elaborate a new range of tasks for the central bank, compatible with the harmonious attainment of the low inflation target, financial stability goal and economic growth goal. The authors' proposals can be incorporated into the preparation of the Basic Principles of Monetary Policy of Ukraine for 2021 and for the medium run. Keywords: monetary policy, inflation targeting, national saving, economic growth.