Ukraine's National Bank keeps key policy rate unchanged at 15.5% for fifth time, pushes back rate-cut expectations to Q1 2026

The Board of the National Bank of Ukraine (NBU) has decided, for the fifth consecutive time, to keep its key policy rate at 15.5% per annum. According to the central bank, this decision will help maintain appropriate monetary conditions to ensure currency market stability, anchor inflation expectations, and bring inflation down to the 5% target.

"Given the amplification of pro-inflationary risks, keeping the key policy rate at its current level is appropriate under the current circumstances. This will help support demand for hryvnia savings instruments, keep inflation expectations under control, and safeguard the sustainability of the FX market, which is important for achieving price stability," the NBU said in a press release published on its website.

The regulator noted that, despite a decline in inflation over recent months, inflation expectations remain elevated, while pro-inflationary risks, particularly those related to rising energy shortages and growing fiscal needs, have intensified. Under these conditions, the NBU plans to maintain relatively tight monetary conditions.

"Inflation is declining, but the underlying price pressure persists, while there are no signs of a steady improvement in expectations," the statement reads. The central bank revised its 2025 inflation forecast slightly downward, from 9.7% to 9.2%, while keeping the 2026 forecast unchanged at 6.6%.

According to the NBU, its baseline macroeconomic forecast released in October envisions that rate cuts will begin in the first quarter of 2026.

"Should risks to price dynamics materialize and/or intensify, particularly if there are more significant underlying inflationary pressures, the NBU will be ready to postpone the key policy rate cuts. At the same time, a weakening of pro-inflationary risks will signal a move towards an interest rate easing cycle," the release said.

As reported, since early March 2025, the NBU has kept the key policy rate at 15.5% for five consecutive meetings. Prior to that, it raised the rate three times starting from mid-December 2024. Before that tightening cycle, the rate had been held at 13% for six months, a level to which it had been gradually reduced from 25% over seven steps beginning in July 2023.