NBU: Inflation to exceed 10% y/y in 2006.

NBU: Inflation to exceed 10% y/y in 2006. According to NBU, inflation will make up more than 10% y/y in 2006. In Jan-Oct 2006, inflation has already reached 8.7% ytd. And taking into account the seasonal spike-up of prices and announced increase of tariffs for regulated administratively services, prices will add at least 1.3% to that. But most likely, it will be considerably more. Keeping inflation within the target is possible only in case of a moratorium on the increase of tariffs for housing services until the end of 2006. The National Bank informs about its intention to try to constrain inflationary pressure by using its own instruments of credit and FX rate policy. In particular, NBU will try to boost the role of interest rates. On the other hand, EconMin keeps the inflation growth forecast at the level of up to 10%. The state budget for 2006 is developed based on an 8.7% inflation forecast. Government forecasts a slowdown of inflation in 2007 to 7.5% compared to 10.3% in 2005.