The NBU raises the key policy rate to 13.5%

On December 12, the Board of the National Bank of Ukraine (NBU) raised the key policy rate by 0.5 percentage points to 13.5% per annum. This is stated in the regulator’s press release.

The market expected the regulator’s discount rate to remain at 13%.

As noted, this decision is aimed at maintaining the stability of the foreign exchange market, keeping inflation expectations under control and gradually slowing inflation to the 5% target.

In recent months, inflation has been growing faster than the NBU’s forecast; in November, it accelerated to 11.2% y/y, with core inflation at 9.3% y/y.

In the coming months, the regulator notes, inflation is likely to continue to rise in annual terms due to the continued influence of factors from the food supply, significant budget expenditures, significant wage increases, and higher energy shortages during the heating season.

However, it should slow down in the future as the situation in the energy sector gradually improves and harvests increase. This will also be facilitated by the NBU’s monetary policy measures and the expected easing of external price pressures.

According to the regulator, the key policy rate hike will help keep inflation expectations under control and support real yields on hryvnia instruments.

According to the NBU, the key risk to inflationary dynamics and economic development remains a full-scale war.

In June 2024, the NBU cut its key policy rate to 13%. On October 31, 2024, the NBU decided to keep it at this level until the summer of 2025, whereas previously it had planned to return to easing it in the first quarter of 2025.

As GMK Center reported earlier, Ukraine’s trade turnover amounted to $101.9 billion in January-November 2024, according to the State Customs Service. In 11 months of 2024, the country imported $63.6 billion worth of goods and exported $38.3 billion.