UPDATE 1-Ukraine central bank cuts key interest rate to 16.5%

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KIEV, Sept 5 (Reuters) - Ukraine’s central bank cut its key interest rate for the third time this year amid slowing inflation, it said in a statement on Thursday.

The cut to 16.5% from 17% was in line with most analysts’ expectations in a Reuters poll.

“The (central bank) is continuing the cycle of monetary policy easing, as it expects inflation to decline to the target of 5%,” it said.

Interest rates have been in double digits since Ukraine plunged into turmoil following Russia’s annexation of Crimea in 2014 and the outbreak of a Moscow-backed separatist conflict in the eastern Donbass region.

But inflation dropped into single digits last year, giving the central bank more breathing space.

In its statement, the central bank said that inflation had slowed in August compared to the 9.1% recorded in July.

It would continue to soften monetary policy if inflation carried on easing towards a target of 5% by the end of 2020, it said. Rates could be reduced at a faster clip if structural reforms accelerated, it added. (Reporting by Natalia Zinets; writing by Matthias Williams; Editing by Toby Chopra)