Today, the National Bank of Ukraine (NBU) cut its key policy interest rate by 200bp to 13.50%. The cut including its size appears appropriate and the overall monetary policy stance remains cautious as consumer price inflation fell to 5.1% y/y in November, stronger and faster than expected from a recent high of 9.6% in May 2019. The rapid disin¬flation has been supported by lower energy prices and a significant appreciation of the UAH (+15% YTD vs. the USD). Another positive news this week was that Ukrainian authorities reached agreement with the IMF staff on a new three-year, USD5.5bn funding arrangement (subject to IMF Board approval). This provides for the opportunity to enhance structural reforms further. However, substantial risks remain on the agenda for Ukraine. The NBU notes that “...the risk of rising threats to macrofinancial stability persists because of court rulings and pressure on the NBU.” External risks include an escalation of the (military) conflict with Russia, including a halt of the Russian gas transit through Ukraine as well as deepening global trade tensions and turmoil on global financial markets.