The Board of the National Bank of Ukraine (NBU) has decided to raise the key policy rate by 0.5 percentage points, from 16% to 16.5% per annum. The new rate takes effect on October 30. This move was prompted by a significant intensification of price pressures and a deterioration in inflation expectations within Ukraine. This was reported by Fakty, citing a statement from the NBU press service, as noted by the PromPolitInform portal.
Why the NBU Raised the Key Policy Rate to 16.5%
In September, headline inflation in Ukraine accelerated to 10% year-on-year, while core inflation reached 8.8%. This trend of rising prices continued into October.
The NBU identifies the rising cost of fuel—driven by the military conflict in the Middle East—and intensified Russian attacks on Ukraine’s storage and logistics infrastructure as the primary factors behind the acceleration in inflation.
In light of these risks, the National Bank has revised its price growth forecasts:
for the end of 2026: the inflation forecast has been raised to 12.5% (up from the previous 10%). For 2027, the forecast has been raised to 7.3% (from 6.9%).
The regulator expects inflation to return to its 5% target in 2028.
The National Bank’s current baseline forecast assumes that the key policy rate will remain at 16.5% until the second quarter of 2027. At the same time, the NBU emphasizes its readiness to respond flexibly and adjust monetary policy based on how events unfold or the impact of Russian attacks on the economy.
The regulator notes that previous measures to tighten interest rate policy have already yielded positive results. Specifically, the attractiveness of hryvnia-denominated assets has been bolstered (major banks have begun raising rates on hryvnia deposits).
Furthermore, the current hike is intended to limit pressure on the foreign exchange market—pressure that has intensified due to declining exports and worsening expectations.
“The NBU is prepared to respond flexibly to further shifts in the risk landscape, taking into account both the persistence of price pressures and the potential effects of a slowdown in economic activity,” the statement reads.
Following a reduction of the key policy rate to 15% in late January 2026, the NBU maintained it at that level for three consecutive meetings. Starting in July, the National Bank raised the rate by 0.5 percentage points in each of three successive decisions.
The details of the Monetary Policy Committee’s discussion, which preceded this decision, are scheduled to be released on Monday, November 9. The next meeting of the NBU Board on monetary policy will take place on December 17.
