The article analyzes the influence of inflation on economic growth and substantiates the main directions of increasing the effectiveness of central bank anti-inflation policy. In order to determine the threshold of inflation, the excess of which has a negative impact on the economic growth, the relationship is analyzed between the inflation rate and the real GDP growth rate on the basis of IMF statistics using the example of 158 countries. It was determined that in 2010–2017, in the global economy, the 6.0% inflation was the marginal value of the inflation rate, beyond which the economic growth rate declined or slowed down. Given the inverse relationship between the inflation rate and the real GDP growth rates as well as empirical calculations for the period 1996–2017, the threshold for inflation rate for Ukraine at the level of 4.51% was determined based on empirical calculations for the 1996–2017 period. The results indicate that the National Bank of Ukraine set the inflation target above the level of the calculated threshold inflation. It has also been established that the link between the rates of nominal GDP growth, as opposed to real GDP, and the inflation rate, is more direct and tighter. It is substantiated that in order to analyze such dependence it is necessary to use GDP deflator instead of CPI. The results indicate that deflation constrains economic growth much less than inflation. In order to increase the effectiveness of central bank pro-cyclical monetary policy aimed at supporting economic growth, the correlation between the rates of real GDP growth and the indicator characterizing the gap between the growth rates of M3 and inflation, which actually reflects the real money supply dynamics, is determined. The results obtained allowed to conclude that in 2009 and 2014–2017, the artificial “squeezing” of the money supply took place in Ukraine, resulting in a decrease in the level of the economy monetization by 22.0% in 2017 compared to 2013. It has been proved that in order to minimize the negative impact of inflationary processes on economic growth, the policy of the National Bank of Ukraine should be aimed at eliminating the artificial “squeezing” of the money supply through a reasonable increase in the economy monetization and the implementation of an effective monetary policy. a sharp rise in inflation, which at that time was mainly due to monetary factors. Today, due to the introduction of inflation targeting mechanisms in most countries, inflation remains at a low and controlled level, but for central banks and governments in developing countries, the issue of developing an effective anti-inflation policy is relevant. Over the past decades, there has been a slowdown in economic growth and uneven economic development in the world. In some countries there are recessions or declines in production due to financial and banking crises that result from the imbalance of natural and costly flows, as well as economic and political instability. Ultimately, such financial instability provokes an increase in inflationary processes. Special role in balancing monetary flows and economic growth rates belongs to central banks, which, as a rule, reluctantly participate in the processes of stimulating economic development. Central banks limit their functions to purely operational approaches to forecasting interest rates and monetary indicators, neglecting the developing and implementing a pro-cyclical monetary policy aimed at supporting economic growth (Mishchenko, Naumenkova, & Lon, 2016). In addition, developing countries often lack the proper coordination of monetary and fiscal policies, which also hold back economic growth. Inflation is an extremely complex economic phenomenon, which requires a thorough study and analysis, including the channels for the transfer of inflationary impulses to the real economy. Most studies have noted the negative effects of inflation on economic growth after reaching a certain threshold. However, the definition of such a level is based mainly on the use of a purely instrumental approach. Researchers do not pay enough attention to the effective anti-inflationary policies by governments and central banks, and high inflation rates are sometimes viewed as one of the characteristics of a weak economy with weak institutions (Khan & Senhadji, 2001). In particular, it concerns channels to form money supply in circulation, the import of inflation, administrative influence by setting prices for certain goods and services or through the level of public expenditures, etc. A high level of inflation may not only be a deterrent to economic growth but also a source of political and systemic threats to world financial markets (Espinoza, Leon, & Prasad, 2010). In world practice, a significant number of examples have been accumulated that characterize different options for the ratio of economic growth and inflation. Economic growth is also possible under high inflation, or, conversely, in case of deflation. For example, in Ukraine during 1992–2017, deflation was observed twice, in 2002 (–0.6%) and in 2012 (–0.2%), while the real GDP growth rates were 5.2% and 0.2%, respectively, in these years. Given that the main task of the macroeconomic policy of governments and central banks is to provide and maintain stable economic growth, high employment and low inflation, the purpose of the current study is to determine the nature and extent of the impact of inflation on economic growth, using the example of a small open economy, and to substantiate the directions of increasing the effectiveness of anti-inflationary policy in Ukraine.