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.
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 stronger underlying price pressures and an expected acceleration in headline inflation. The NBU signalled a possible further increase before monetary easing resumes in Q2 2027.