The Board of the National Bank of Ukraine has decided to keep the discount rate at the previous level of 15.5%. This move, as emphasized by the regulator, is aimed at supporting stability in the currency market and keeping inflation expectations under control. This is expected to contribute to a further easing of price pressure in the economy.
This is reported by Finway
Monetary Policy and Macroeconomic Trends
The National Bank emphasizes that it is prepared to maintain sufficiently tight monetary conditions for as long as necessary to achieve the goal of reducing inflation to 5% in the medium term.
Inflation in Ukraine peaked in May but began to decline in June, standing at 14.3% year-on-year. At the same time, this figure exceeded previous forecasts, mainly due to adverse weather conditions that limited the supply of food products. In contrast, core inflation, which decreased to 12.1%, is demonstrating a more rapid slowdown than expected.
The NBU will maintain sufficiently tight monetary conditions for as long as necessary to ensure a sustainable reduction in inflation to the target of 5% on the policy horizon.
Price Outlook and Inflation Expectations
The currency market in Ukraine remained stable, attributed to previous decisions to raise interest rates. Fluctuations in the exchange rate of the hryvnia against the US dollar were minor, and the impact of the hryvnia’s depreciation against the euro has not yet had a significant inflationary effect.
Inflation expectations among various economic agents show mixed dynamics. In particular, household expectations have somewhat deteriorated, while financial analysts are more optimistic in the short term, maintaining confidence in the temporary nature of the current inflation spike. Overall, expectations remain controlled and lower than the actual level of inflation.
Price dynamics in the coming months will largely depend on the influence of weather factors on agricultural production. According to NBU estimates, a slight increase in overall inflation is likely in July, while core inflation will continue to decline. It is expected that inflation will embark on a path of sustainable slowdown thereafter.
At the same time, due to significant losses from the war, rising raw material costs, and increased business expenses, the inflation reduction forecast has been revised: to 9.7% in 2025, 6.6% in 2026, with the target level of 5% expected to be reached by 2027.
Monetary measures, gradual increases in harvests, moderate external price pressure, and improvements in the labor market against the backdrop of a stable currency market and adequate international financing will contribute to the reduction of inflation.