The National Bank of Ukraine has decided to maintain the discount rate at 15%. This decision was justified by the increasing risks of heightened inflationary pressure and deteriorating inflation expectations, which have influenced the regulator’s further policy.
This is reported by Finway
Reasons and Consequences of the NBU’s Decision
Representatives of the National Bank explained that the postponement of further easing of monetary policy is aimed at supporting the attractiveness of hryvnia instruments, the stability of the currency market, and the controllability of inflation expectations. This is intended to ensure moderate inflation in 2026 and help achieve the target inflation level of 5% in the medium term.
“In the event of continued risks to price dynamics, the NBU will refrain from further easing of monetary policy, and if these risks intensify, it will be ready to raise the discount rate and take additional measures,” the regulator’s statement noted.
Inflation Dynamics and External Risks
In February of this year, overall inflation in Ukraine accelerated to 7.6% year-on-year, which slightly exceeded the National Bank’s forecast. At the same time, core inflation remained stable at 7% year-on-year, fully aligning with the regulator’s expectations. However, inflation expectations among households have significantly deteriorated, likely due to the challenging situation in the energy sector at the beginning of the year and the rising prices of consumer goods. Expectations among other groups of respondents remained relatively stable.
The National Bank notes that the future trajectory of inflation may be higher than previously anticipated. This is influenced by the rising costs of energy resources, particularly due to military actions in the Middle East. At the same time, external financial assistance allows Ukraine to finance the state budget deficit and maintain international reserves at a high level, which stood at about $55 billion by the end of February. This is a key factor for the stability of the currency market.
Despite these measures, the consequences of Russia’s military aggression remain the main challenge for inflation dynamics and Ukraine’s economic development. Additionally, over the past month, geopolitical risks have significantly intensified, which may affect the regulator’s future decisions.