The National Bank of Ukraine raised its key policy rate by 50 basis points to 15.5% on Thursday, its first increase since January, as it moved to contain accelerating inflation driven by war-related costs and rising business expenses. The decision takes effect on Friday, July 31.
“The NBU Board has decided to raise the rate to 15.5% in view of persistent fundamental price pressures and a sharper acceleration of overall inflation expected by year-end,” Governor Andriy Pyshnyy said at a briefing. The hike is intended to preserve the attractiveness of hryvnia assets, maintain currency market stability and anchor inflation expectations.
Consumer inflation slowed to 7.2% in June, but core inflation accelerated to 8.1% year on year, above the trajectory the central bank projected in April. The NBU said headline inflation resumed rising in July and forecast that it will accelerate to 10% by the end of 2026, with core inflation reaching 9.2%.
Inflation is expected to start declining in 2027, to 6.9%, and to reach the 5% target by the end of 2028, supported by a gradual reduction of the budget deficit, easing labor market pressures and expected improvements in the energy sector as security risks diminish.
The war continues to weigh on the economy, with Russian strikes increasingly targeting business production facilities and logistics infrastructure, including ports critical for exports. Real GDP grew 0.8% year on year in the second quarter, and the NBU revised its 2026 growth forecast up to 1.8%. International reserves are expected to rise to nearly $70 billion by the end of the year, helped by about $54 billion in direct budget support from international partners in 2026.
The increase reverses part of a long easing cycle. The NBU lifted the rate to 10% in January 2022 and hiked it sharply to 25% in June 2022 after Russia’s full-scale invasion, holding it there for more than a year before cutting gradually from July 2023. The rate had stood at 15% since January 2026, after the bank suspended cuts in March.
“The NBU stands ready to continue using monetary tools, including further tightening of interest rate policy, to contain price pressures,” Pyshnyy said. The bank said the move will have no noticeable dampening impact on lending, which has been growing by more than 30% per year.
The NBU’s forecast envisages the possibility of further rate increases, with a return to easing possible in the second quarter of 2027. An updated inflation outlook will be published in the Inflation Report on August 6, and the next monetary policy meeting is scheduled for September 17.
Sources: National Bank of Ukraine, Ukrinform
Author: Finance Desk
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