- Decision
- Raise
- Rate change
- 50 bps
- key policy rate
- 15.5%
The National Bank of Ukraine (NBU) raised its key policy rate by 50 basis points to 15.5% in July, citing persistently stronger underlying price pressures and a sharper expected acceleration in headline inflation, while seeking to support hryvnia assets and foreign-exchange market sustainability. The move reversed January’s 50 basis point cut to 15%, after the rate was held from March through June. The NBU will begin updating its interest-rate policy operating framework to revitalize the money market and strengthen pricing benchmarks. Headline inflation temporarily slowed to an estimated 7.2% in June, while core inflation accelerated to 8.1%, and the NBU expects headline inflation to reach 10% by end-2026 before returning to the 5% target by end-2028. It raised its 2026 real GDP growth forecast to 1.8%, supported by fiscal stimulus, while intensified attacks on infrastructure and business facilities constrain activity, and said lending continues to grow rapidly amid high banking-system liquidity. External assistance is expected to finance the budget deficit, while international reserves are projected to approach USD 70 billion by year-end despite greater structural foreign-exchange demand. The war remains the main risk, while renewed Middle East tensions and rising oil prices could add pressure. The NBU signalled that a further rate increase is possible before a return to monetary easing in Q2 2027 and said it remains prepared to tighten policy further if needed.
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.