- Decision
- Raise
- Rate change
- 50 bps
- key policy rate
- 16%
The Board of the National Bank of Ukraine (NBU) raised the key policy rate by 50 basis points to 16%, citing persistent underlying price pressures, second-round effects from supply shocks and higher medium-term inflation risks, while seeking to return inflation toward the 5% target. Over the past year, the NBU held the rate at 15.5% in Q4 2025, cut it by 50 basis points to 15% in January, held through June and reversed that cut in July before the latest increase. The move aims to sustain the attractiveness of hryvnia assets and FX market stability. Consumer inflation accelerated to 8.1% year on year in August, slightly exceeding the July forecast as fuel prices and administered tariffs rose, while underlying pressures remained elevated by energy, logistics and labor costs. Credit expansion is at its longest on record, and the NBU expects no noticeable dampening of lending from the increase. Smaller-than-expected official financing in July and August reduced international reserves, making regular and sufficient external assistance crucial for macrofinancial stability. Russia’s attacks and the war in the Middle East, particularly higher oil and fuel prices, pose risks to inflation and growth, although ample domestic food supply should restrain prices. The NBU expects inflation to resume declining in 2027 and stands ready to tighten further if price and expectations risks intensify, or consider easing if a worsening security situation noticeably weakens consumer demand and the labor market.
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.