“We have raised the rate to 12% from April 30,” Valery Lytvytsky, head of a group of advisers to the central bank chairman, told Reuters. A central bank statement said the new rise was “intended to rein in inflation”. The bank last raised its discount rate, to 10% from 8, on January 1. Inflation over the first three months of 2007 stood at 9.7%, exceeding the government’s initial forecast of 9.6% for the entire year. The bank’s deputy head, Anatoly Shapovalov, had earlier said rates would be boosted if inflation figures remained high in March. The month-on-month figure came in at 3.8%, the highest since 1999.

The central bank statement also raised the overnight rate to 15.0% from 14.5% — for bank credits backed by government securities. The statement said the central bank had repeatedly warned commercial banks of the necessity of observing its credit policy.

Central bank Chairman Volodymyr Stelmakh earlier this month told parliament that high inflation was linked to rises in government social benefits and said the country was witnessing the first signs of “stagflation”. Prime Minister Yulia Tymoshenko says her government inherited inflation from her predecessor and said central bank increases in money supply were also to blame. (Reuters)