They create the danger of a wage-price spiral with subsequently accelerating inflation. So far, only the direct effects of higher oil prices have been noticeable, although they have been less inflationary than in the 1970s. Headline inflation is still being driven mainly by energy prices. With core inflation remaining subdued, indirect effects of the oil price shock have remained contained.
Why did the NBU decide to cut the key policy rate by as much as 2.5 pp? The balance of risks has practically remained unchanged since the previous monetary policy 2/3  BIS central bankers' speeches  meeting, while inflation has slowed down to its target of 5% ± 1 pp even faster than the NBU expected.