National Bank of Ukraine Raises Key Policy Rate by 50 Basis Points to 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.