GRAPHIC-Tight enough? Ukraine's central bank decides on rates

By Karin Strohecker and Claire Milhench

LONDON, April 11 (Reuters) - Following four consecutive rate increases, central bank policy makers in Ukraine are expected to hold fire when they meet on Thursday, with inflation showing signs of slowing

Ukraine has seen a tumultuous few years: a pro-Western change of government in Kiev in early 2014 was followed by Russia's annexation of its Crimea region before an International Monetary Fund bailout involving a restructuring of its external bonds pulled a near-bankrupt Ukraine back from the brink.

March inflation came in at 13.2 percent year-on-year, down from 14 percent in February.

Below are four graphics showing the current dynamics at play in Ukraine's economy.

1/ PAST THE PEAK?

Inflation has been stubbornly high and in the double digits since 2014. The readings shifted still higher in 2017, fuelled by higher food and oil prices as well as a rise in workers' wages and pensions last year.

Having cranked up interest rates to 17.00 percent, the central bank said at its March meeting that monetary conditions were tight enough to bring inflation back to its mid-term target. The bank hopes to cut inflation to 6 percent in 2019.

2/ RECOVERING BUFFERS

Defying often slow reforms and ensuing delay to the IMF tranches, Ukraine's hryvnia has been one of the best- performing currencies against the dollar across emerging market in 2018.

Following four years of decline, the currency has gained more than 8 percent since the end-December.

Meanwhile, although the central bank's foreign-exchange reserves have been shrinking since the start of 2018 because of debt payments, they remain well above an early 2015 low of around $6 billion, providing policy makers with a buffer .

3/ MODERATING GROWTH

Private-sector credit growth for both households and corporates has recovered somewhat over the past 12 months, after shrinking sharply in 2016.

At the same time, Ukraine's economy has got back on its feet, with gross domestic product growing 2.5 percent in 2017, compared with 2.4 percent a year earlier, according to preliminary data released in March.

However, Tim Ash, a strategist at BlueBay Asset Management, said in an April 5 note to clients that real GDP growth was still disappointing given the low base.

More worryingly, he added, the quarterly trend, plus higher frequency indicators such as construction output, retail sales and new car registrations, suggested growth was moderating, not accelerating.

The World Bank has warned that economic growth might slow to below 2 percent in 2018 and 2019, underperforming expectations, if the government does not take steps to modernise its economy and eliminate corruption.

4/ BOND ISSUANCE

The Ukraine government plans to borrow about $2 billion this year after it returned to international capital markets in style in September 2017, raising $3 billion from eager investors.

Books for the bond, which carries a coupon of 7.375 percent, peaked at $9 billion as investors queued up for the sovereign's first international bond as a standalone credit since 2013. The issue was undertaken with a buyback of the sovereign's 2019 and 2020 notes.

(Reporting and graphics by Karin Strohecker and Claire Milhench; additional reporting by Natalia Zinets; editing by Larry King)

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