According to Interfax-Ukraine, the Board of the National Bank of Ukraine (NBU) raised the discount rate by 0.5 percentage points (p.p.)—to 16.5% per annum—effective October 30, due to a significant increase in price pressures and a deterioration in inflation expectations.
“The NBU is prepared to respond flexibly to further changes in the risk landscape, taking into account both the persistence of price pressures and the likely consequences of a slowdown in economic activity,” the regulator noted in a press release on Thursday.
The National Bank’s current forecast calls for keeping the policy rate at 16.5% until the second quarter of 2027. At the same time, the regulator will adjust monetary policy depending on actual developments, particularly the impact of Russian attacks on inflation and economic activity, the statement noted.
According to the updated forecast path, the rate is expected to decline in the second quarter to an average of 16.2%, up from 15.3% in the previous forecast, and is now projected to reach 14.6% by the fourth quarter of 2027, compared to 14.0% in the July forecast.
In September, headline inflation accelerated to 10% year-over-year, while core inflation rose to 8.8%, and this trend continued in October. The main factors were rising fuel prices due to the war in the Middle East and intensified Russian attacks on warehouse and logistics infrastructure, the NBU noted.
The regulator raised its inflation forecast for the end of 2026 to 12.5% from 10%, and for 2027 to 7.3% from 6.9%. The regulator continues to expect inflation to return to the 5% target in 2028.
According to the updated inflation forecast curve, inflation is expected to decline as early as the first quarter of this year—to 11.7% from 9.1% in the July estimate—and in the second quarter to 11.5% from 8.7%.
According to the National Bank, the previous tightening of monetary policy has already bolstered the attractiveness of hryvnia-denominated assets: even large banks have begun raising interest rates on hryvnia deposits. The current decision should also limit pressure on the foreign exchange market, which has intensified due to a decline in exports and worsening expectations amid Russian attacks.
The results of the Monetary Policy Committee’s discussion, which preceded the decision to raise the rate to 16.5% per annum, will be released on November 9.
The next meeting of the NBU’s Board on monetary policy will take place on December 17, 2026.
As previously reported, after lowering the discount rate to 15% at the end of January 2026, the NBU kept it at that level for three consecutive meetings, and since July has raised it three times in a row by 0.5 percentage points.
