Ukraine Holds Policy Rate at 15%

The National Bank of Ukraine maintained its benchmark policy rate at 15% in its June 2026 meeting, a third consecutive hold since the 50bps rate cut at the start of the year. The central bank noted that the current levels of interest rates ensured a sufficiently tight monetary backdrop for the Ukrainian economy and was high enough to stimulate demand for hryvnia denominated fixed income. Still, the NBU delivered a hawkish outlook by noting it is ready to raise interest rates should it see that higher energy prices from the war in the Middle East are becoming entrenched in core sectors of the price basket. Consumer inflation slowed to 8.2% in May but core inflation rose to 7.9%, both above forecasts from the central bank. The NBU expects inflation to remain steady in the coming months and rise at the end of the year, before dropping in 2027.

The National Bank of Ukraine maintained its benchmark policy rate at 15% in its March 2026 meeting after delivering a 50bps cut in its first decision of the year. The hold contrasted with the earlier possibility that the central bank would attend to growth concerns and the labor market and continue to make monetary policy more accommodative. However, the outbreak of war in the Middle East and its risk on global energy supplies triggered surges in key energy prices, raising inflationary risks for the Ukrainian economy. Further, the geopolitical concerns lifted global demand for the dollar and pressured the hryvnia, further limiting the room for lower borrowing costs. Inflation had increased to 7.6% in February after a long period of decreases. The central bank signaled that it will refrain from resuming rate cuts until there is clear evidence that energy prices are not translating to unanchored inflation expectations.

The National Bank of Ukraine has begun easing monetary policy by cutting its key rate by 50bps to 15% in January 2026, reflecting easing inflationary pressures and reduced risks to external financing, while still aiming to return inflation to its 5% target over the medium term. Inflation slowed to about 8% year on year by the end of 2025 due to strong harvests, easing labor market pressures, and a stable FX market, and it is expected to keep declining in early 2026 before temporarily accelerating in the second half because of energy-sector damage and low base effects, ending 2026 at around 7.5%, falling to 6% in 2027 and reaching 5% in 2028. Economic growth remains modest due to the war, about 1.8% in 2025–2026, but should accelerate to 3–4% in 2027–2028 as reconstruction, investment, and energy recovery progress.