Ukraine’s central bank raised the prime rate by a full percentage point to 7.5 percent – putting it back to where it was a year ago.

The bank said the rise was intended to put a brake on inflation and keep it within the confines of 5 percent by the first half of 2022. It revised upward its forecast 2021 inflation figure to 8 percent from 7 percent. Price rises would hit a peak in the third quarter.

The central bank also nudged downward its 2021 forecast for growth, predicting 3.8 percent GDP growth instead of the initially forecast 4.2 percent. It attributed the change to the effects of new Covid quarantine restrictions and the resulting slowdown in business activity.

After a 2.8% drop during January-February, growth should return in the second quarter, the bank predicts.

The World Bank also predicts 2021 GDP growth of 3.8%, while the International Monetary Fund forecast stands at 4 percent. The economy, hit by Covid lockdowns, contracted 4 percent in 2020, according to the State Statistics Service.