The National Bank of Ukraine raised its key policy rate by 0.5 percentage point to 16%, citing persistent underlying price pressures, second round effects from supply shocks and increased medium term inflation risks. The tightening is intended to support demand for hryvnia assets, limit pressure on the foreign exchange market and return inflation toward the 5% target. The central bank expects no noticeable dampening effect on lending. Consumer inflation accelerated to 8.1% year over year in August, slightly above the bank’s July forecast, as the Middle East conflict drove fuel prices higher and Russian attacks on critical infrastructure contributed to faster increases in administered tariffs. Core inflation remained high amid rising energy, logistics and labor costs, rapid wage growth and elevated inflation expectations. Inflation may exceed the previous forecast in the coming months but is expected to resume declining in 2027, supported by tighter monetary policy and ample domestic food supplies. Risks remain centered on the war, further infrastructure damage, labor shortages, additional budget needs, higher oil prices and potential disruption or shortfalls in international financing. The bank said it could tighten policy further if risks to inflation and expectations intensify, but would consider easing monetary conditions if a deteriorating security situation materially weakens consumer demand and the labor market.
2026-09-17National Bank of Ukraine
National Bank of Ukraine raises key policy rate by 0.5 percentage point to 16% amid persistent price pressures
The National Bank of Ukraine raised its key policy rate by 0.5 percentage point to 16% as underlying price pressures and medium term inflation risks increased. Inflation reached 8.1% in August, driven partly by higher fuel prices and infrastructure damage. The bank may tighten further if inflation risks worsen, while weaker demand and labor market conditions could prompt easing.