The National Bank of Ukraine has decided for the fourth consecutive time not to change the key rate, keeping it at 15.5%. This decision was announced on September 11. As noted by the regulator, although inflation in the country is gradually decreasing, its level remains quite high. In particular, in August, inflation was 13.2% year-on-year.
This is reported by Finway
“Inflation is stabilizing on a downward trajectory, but it is still high,” the regulator explained its decision.
Main Factors Restraining Inflation
The NBU notes that the slowdown in inflation has been made possible by several factors. First and foremost, the arrival of the new harvest has led to a significant reduction in the growth rates of prices for raw food products, which has also contributed to restraining prices for processed food products. At the same time, the measures taken by the National Bank and positive dynamics in the labor market have ensured a decrease in core inflation, which currently stands at 11.4% year-on-year. Core inflation includes both services and non-food goods.
Additionally, the country is experiencing an increase in the supply of labor, as well as a reduction in the gap between expected and actual wages.
Forecast and Possible Risks for Monetary Policy
According to the NBU’s July macroeconomic forecast, the beginning of the cycle of lowering the key rate is expected in the fourth quarter of 2025. However, the National Bank warns that if inflationary risks arise or intensify, such as an escalation of hostilities, more intense shelling, increased destruction, or additional budget expenditures, the rate reduction may be postponed. If necessary, the regulator is ready to take additional measures to ensure price stability.