- Decision
- Raise
- Rate change
- 100 bps
- key policy rate
- 14.5%
The Board of the National Bank of Ukraine (NBU) raised the key policy rate by 100 bp to 14.5 % per annum, effective 24 January 2025, aiming to bolster foreign-exchange market stability, anchor expectations and reverse the recent up-trend in inflation toward its 5 % target. To reinforce transmission, it also lifted the rates on overnight certificates of deposit to 14.5 %, three-month CDs to 17.0 % and refinancing loans to 17.5 %. Annual headline inflation climbed to 12 % in December 2024, with core inflation at 10.7 %; the NBU projects a peak in the second quarter of 2025 before slowing to 8.4 % by end-2025 and to target in 2026, while real GDP growth is estimated at 3.4 % for 2024 and expected to edge up to 3.6 % in 2025 despite ongoing war-related disruptions and labour shortages. External financing of USD42 bn in 2024 pushed reserves to USD43.8 bn, and a further USD38.4 bn is anticipated this year to cover a fiscal deficit of about 19 % of GDP and support the managed-float hryvnia regime. The central bank underscored heightened risks from Russia’s continuing aggression, potential tax increases and uncertain global conditions, though it also cited possible upside from larger partner support and reconstruction. The NBU signalled readiness to tighten policy further if persistent price pressures or unanchored expectations threaten progress toward its inflation goal.
Rate evolution
Over the period, the National Bank of Ukraine held its key policy rate at 15.5% through 2025, cut it by 50 basis points to 15% in January 2026, paused, and subsequently raised it in two 50-basis-point steps to 16%. Through most of 2025, it kept a tight stance to support FX market sustainability and keep inflation expectations in check as inflation, peaking in May and then slowing, remained above forecast at times and underlying pressures from wages, labor shortages, energy costs, demand and war-related disruption persisted. Late in 2025, the risk balance turned more hawkish, with greater emphasis on energy shortages, larger budgetary needs and uncertainty over external assistance, even as harvests and official financing supported disinflation and reserves.
After the January cut, the NBU held at 15% as inflation rose on energy and fuel prices linked to the war in the Middle East, hryvnia weakness and faster wage growth, before raising it to 15.5% as persistent pressures from logistics, wage and energy costs continued despite increased raw food supply. Most recently, it raised the key policy rate to 16% in view of persistent underlying price pressures, second-round effects from supply shocks and higher medium-term inflation risks, after consumer inflation accelerated to 8.1% year on year in August, primarily on a greater-than-expected rise in fuel prices amid escalation in the Middle East and faster increases in administered tariffs due largely to Russia’s attacks on critical infrastructure. The increase aims to support the attractiveness of hryvnia assets, maintain FX market sustainability, keep inflation expectations in check and return inflation toward the 5% target, while the NBU said it stood ready to tighten further if risks intensified or consider easing if the security situation noticeably weakened consumer demand and the labor market.