The NBU raises the key policy rate to 15.5%

The Board of the National Bank of Ukraine (NBU) has decided to raise the key policy rate from 14.5% to 15.5% per annum effective March 7. This is stated in the regulator’s press release.

The decision was made to maintain the stability of the foreign exchange market, keep expectations under control, and gradually bring inflation to the 5% target on the NBU’s policy horizon.

The rate hike is in line with market participants’ expectations and the regulator’s own January forecast.

The NBU reminded that in January, inflation accelerated to 12.9% year-on-year. According to the regulator, it continued to grow in February.

“Inflation will continue to rise in the coming months due to the continued impact of last year’s poor harvests and higher production costs. At the same time, the NBU’s monetary policy tightening measures will limit underlying price pressures, and the arrival of new harvests in the summer will slow the growth of food prices,” the central bank forecasts.

The regulator expects that, thanks to the NBU’s measures and the gradual exhaustion of the impact of temporary drivers of inflation, it should return to a slowdown in the second half of the year and decline to single digits by the end of the year.

A full-scale war remains the key risk to inflationary dynamics and economic development, the regulator notes. The speed of the economy’s return to normal conditions will depend on the nature and duration of hostilities. At the same time, the NBU notes an increase in geopolitical uncertainty, which increases the risks caused by Russian aggression, in particular, further damage to infrastructure and an expansion of labor shortages in the domestic labor market.

In addition, the risks of less favorable foreign economic trends have increased. However, the NBU does not rule out positive scenarios.

This is the third increase in the NBU’s key policy rate since December 2024.

As GMK Center reported earlier, the International Monetary Fund has lowered its forecast for Ukraine’s economic growth in 2025 by 0.5 percentage points from its previous expectations to 2-3%.