The Board of the National Bank of Ukraine (NBU) expectedly raised the key policy rate by 0.5 percentage points to 16% per annum, citing persistent underlying price pressures, second-round effects from supply shocks and increased medium-term inflationary risks as the reasons for the decision.
"This decision will support the attractiveness of hryvnia-denominated assets and the stability of the foreign exchange market, which will help keep inflation expectations under control and return inflation to a path of sustainable decline toward the 5% target over the policy horizon," the regulator said in a press release Thursday.
Consumer inflation accelerated to 8.1% year-on-year in August, slightly exceeding the trajectory projected in the NBU's July forecast. The regulator attributed this primarily to a stronger-than-expected increase in fuel prices amid the escalation of the war in the Middle East and faster growth in certain regulated tariffs due to the consequences of Russian attacks on critical infrastructure.
The central bank expects inflation to be somewhat higher in the coming months than projected in its previous forecast, but said it will return to a slowing trajectory in 2027.
The regulator also said that official external financing in July-August was lower than expected, resulting in a decline in international reserves. At the same time, provided that Ukraine fulfills its commitments under support programs, a significant portion of the financing should be replenished in the following months.
Among other risks, the National Bank cited the possible emergence of additional budgetary needs for defense and reconstruction, as well as increased wage pressures due to the labor shortage. At the same time, a deterioration in the security situation could cool consumer demand and the labor market, which would have a disinflationary effect.
"If a deterioration in the security situation in the coming months leads to a noticeable cooling of consumer demand and the labor market, the NBU will consider the possibility of easing monetary conditions," the press release said.
As reported, in late January 2026, the National Bank cut the key policy rate from 15.5% to 15% per annum and subsequently kept it at that level for three consecutive meetings. At its previous meeting in July, the regulator unexpectedly raised the rate by 0.5 percentage points to 15.5% per annum and announced the possibility of another increase by the end of the year.
The NBU will publish the results of the discussion by members of the Monetary Policy Committee on the issue of raising the key policy rate to 16% per annum on September 28.
The next meeting of the National Bank's Board on monetary policy issues will be held on October 29, 2026.
