FX.co ★ Ukraine Keeps Key Policy Rate at 15.5%

The National Bank of Ukraine decided to maintain its key policy rate at 15.5% during its December meeting, keeping borrowing costs at a peak not seen since November 2023. This decision underscores the persistent inflationary pressures and uncertainties regarding external financing. Though both consumer and core inflation eased to 9.3% in November, aided by an increased food supply from the recent harvest, these figures still surpass the 5% target. Despite a trend toward disinflation since June, inflation expectations remain high. Domestically, economic activity and credit growth are robust, with lending expanding at an annual rate exceeding 30%, suggesting that further economic stimulus is unnecessary. On the external financing front, Ukraine has secured USD 45.8 billion in official funding this year, with an additional USD 5 billion anticipated by the end of the year. However, the financial outlook for 2026–2027 remains uncertain. The ongoing conflict between Russia and Ukraine continues to pose significant threats to both inflation and the country’s economic growth.