FX.co ★ Ukraine Raises Interest Rate to 16.5%

The National Bank of Ukraine has raised its key discount rate to 16.5% in response to mounting inflationary pressures and worsening inflation expectations. This step is intended to enhance the attractiveness of hryvnia-denominated assets, stabilize the foreign exchange market, and curb price growth. Inflation has accelerated due to rising fuel prices and disruptions to business operations and logistics caused by Russian attacks. In September, annual headline inflation reached 10%, while core inflation climbed to 8.8%, with upward pressure persisting into October. As a result, the NBU has revised its 2026 inflation forecast up to 12.5%, but expects inflation to ease to 7.3% in 2027 as the impact of higher fuel costs fades and tighter monetary policy takes effect. The 5% inflation target is now projected to be achieved in 2028. At the same time, war-related damage continues to weigh on economic activity, making international financial support critical for maintaining macroeconomic stability.