The NBU’s decision to hold the key interest rate at 15.50% marks a continuation of a tight monetary policy stance that began in early 2025. Since March 2025, the rate has remained unchanged at this elevated level, reflecting the central bank’s priority to anchor inflation expectations amid ongoing external shocks and fiscal pressures. The rate is notably higher than the 13.50% recorded in December 2024, underscoring a significant monetary tightening over the past year.

Drivers this month

• Inflation remains elevated at approximately 14.20% YoY, driven by food and energy prices.
• Geopolitical tensions continue to weigh on investor confidence and capital inflows.
• Fiscal deficits remain substantial, with government borrowing needs pressuring domestic rates.

Policy pulse

The 15.50% rate sits well above the NBU’s inflation target range of 5% ± 2%, signaling a deliberate effort to contain inflationary pressures despite growth headwinds.

Market lens

Immediate reaction: The UAH/USD exchange rate showed mild appreciation, strengthening 0.30% within the first hour post-announcement, reflecting market relief at policy stability.

Ukraine’s core macroeconomic indicators reveal a mixed but challenging environment. Inflation remains the dominant concern, with consumer prices rising 14.20% YoY in September 2025, slightly down from 14.50% in August but still well above the central bank’s target. GDP growth is modest, estimated at 1.80% YoY for Q3 2025, constrained by ongoing conflict-related disruptions and weak external demand.

Monetary Policy & Financial Conditions

The NBU’s steady interest rate at 15.50% maintains tight financial conditions. Credit growth remains subdued at 3.20% YoY, reflecting cautious lending amid elevated risk premiums. The real policy rate, adjusted for inflation, is approximately 1.30%, indicating mildly restrictive conditions designed to temper inflation without stifling recovery.

Fiscal Policy & Government Budget

Fiscal deficits remain elevated at 5.80% of GDP, driven by increased defense spending and reconstruction efforts. Government debt-to-GDP ratio stands at 55%, up from 50% a year ago, raising concerns about sustainability. However, international aid and concessional loans provide some buffer against immediate fiscal stress.

External Shocks & Geopolitical Risks

Ongoing conflict in eastern Ukraine and tensions with Russia continue to pose significant risks. Energy supply disruptions and trade barriers have exacerbated inflation and supply chain bottlenecks. The geopolitical environment remains the key downside risk to economic stability and investor sentiment.

Drivers this month

• Inflation deceleration from 14.50% to 14.20% YoY reduces immediate pressure for hikes.
• Stable UAH exchange rate supports inflation outlook.
• Fiscal discipline remains weak, limiting scope for monetary easing.

Policy pulse

The unchanged rate signals the NBU’s wait-and-see approach, balancing inflation control with growth risks.

Market lens

Immediate reaction: The 2-year government bond yield edged down by 5 basis points, reflecting market confidence in policy continuity.

Looking ahead, Ukraine’s monetary policy trajectory depends on inflation dynamics, fiscal consolidation, and geopolitical developments. Three scenarios emerge:

Bullish scenario (30% probability)

• Inflation falls below 8% by mid-2026 due to improved supply chains and energy prices.
• Fiscal reforms reduce deficit below 3% of GDP.
• Geopolitical tensions ease, boosting investor confidence.
• Result: NBU cuts rates gradually to 12% by Q4 2026, spurring credit growth and investment.

Base scenario (50% probability)

• Inflation moderates slowly, remaining near 10% through 2026.
• Fiscal deficits persist around 5%, with limited reforms.
• Geopolitical risks remain elevated but contained.
• Result: Policy rate stays near 15.50% through 2026, maintaining tight financial conditions.

Bearish scenario (20% probability)

• Inflation spikes above 18% due to renewed conflict or energy shocks.
• Fiscal deficits widen beyond 7% of GDP.
• Capital flight intensifies, weakening UAH sharply.
• Result: NBU hikes rates above 17% to defend currency and anchor inflation expectations.

Policy pulse

The NBU’s forward guidance will be critical in managing expectations amid these scenarios. Market participants will closely watch inflation data and fiscal developments for clues on future rate moves.

Market lens

Immediate reaction: Forward UAH volatility contracts slightly, signaling reduced uncertainty post-decision.

Ukraine’s interest rate decision to hold at 15.50% reflects a balancing act between inflation control and economic growth amid persistent geopolitical and fiscal challenges. The steady rate after a series of hikes signals the NBU’s cautious confidence in stabilizing inflation, though risks remain elevated. Fiscal consolidation and geopolitical developments will be decisive in shaping the monetary policy path in 2026.

Investors and policymakers should monitor inflation trends, fiscal discipline, and external shocks closely. The current tight monetary stance supports the currency and inflation expectations but may constrain growth if maintained too long. Flexibility and responsiveness will be key as Ukraine navigates its complex macroeconomic landscape.

Interest Rate vs. UAHUSD Exchange Rate Since 2020

Year	Interest Rate (%)	UAHUSD Exchange Rate (End-Year)
2020	8.00	28.00
2021	7.50	27.50
2022	10.00	29.50
2023	13.50	32.00
2024	14.00	33.50
2025 (Oct)	15.50	33.00

This table illustrates a clear correlation between rising interest rates and UAH depreciation, reflecting the central bank’s efforts to stabilize the currency amid inflation and geopolitical pressures. The recent stabilization of rates at 15.50% coincides with a slight recovery in UAH value, signaling tentative market confidence.

FAQs

What is the current interest rate set by the National Bank of Ukraine?

The current interest rate is 15.50%, unchanged since March 2025, reflecting a tight monetary policy stance.

How does the interest rate decision impact inflation in Ukraine?

The high interest rate aims to contain inflation, which remains elevated at around 14.20% YoY, by tightening financial conditions and anchoring expectations.

What are the main risks facing Ukraine’s monetary policy outlook?

Key risks include geopolitical tensions, fiscal deficits, and external shocks that could force either further tightening or loosening of policy.

Takeaway: The NBU’s steady 15.50% interest rate underscores a cautious approach to inflation amid geopolitical and fiscal challenges, with future policy hinging on evolving risks and economic data.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.