The National Bank of Ukraine (NBU) has lowered its key policy rate from 15.5% to 15% per annum, according to a statement released by the NBU press service and cited by DS. The PromPolitInform portal reports.
According to the central bank, inflationary pressure has eased, while risks related to external financing have declined. This allowed the NBU Board to loosen its monetary policy.
The decision to cut the key rate is consistent with the NBU’s objective of bringing inflation down to 5%. In December 2025, inflation slowed to 8% year-on-year, driven by:
- a higher harvest;
- reduced pressure in the labor market;
- a stable situation in the foreign exchange market.
The NBU estimates that consumer price growth continued to slow in January, although inflation expectations remain relatively high.
In the coming months, inflation is expected to decline further due to the strong 2025 harvest. However, large-scale damage to the energy sector will affect prices and begin to exert upward pressure through both market and administrative mechanisms, the NBU said. As a result, the regulator expects a moderate acceleration of inflation in the second half of the year, with inflation projected to decline to 7.5% by the end of 2026.
As hromadske notes, the key policy rate is one of the main indicators of the economy. It is the interest rate at which the NBU provides funds to banks and effectively sets the lower bound below which it is unprofitable for commercial banks to lend to customers. The key rate is among the NBU’s most important tools for influencing inflation (price growth).
By cutting the rate, the regulator makes loans more affordable, as interest rates decrease. This encourages banks to lend more, increasing the amount of money in circulation. When more money is available in the economy, inflation tends to accelerate: fewer funds remain in deposits, more cash is held by households, and consumer spending rises.
Higher inflation effectively leads to a depreciation of the hryvnia, as rising prices reduce the purchasing power of the same amount of money.
The opposite effect occurs when the key rate is raised: loans and deposits become more expensive, encouraging households to save more. As a result, less money circulates in the economy, and inflation slows.
