Ukraine's central bank holds rate steady despite falling inflation
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The National Bank of Ukraine voted to keep its benchmark interest rate unchanged at 15.5%, amid steep uncertainty over the country's financing next year.
Inflation slowed to 9.3% in November, continuing its downward trend since a peak of 15.9% in May 2025. That would usually lay the foundations for a rate cut — but Ukraine's central bank is being cautious amid a gaping hole in Ukraine's finances forecast for next year.
Ukraine needs 135 billion euros ($160 billion) in combined financial and military support in 2026–2027, according to the EU. Brussels is trying to secure agreement on a reparations loan, which would cover two-thirds of Kyiv's needs over the next two years, backed by frozen Russian assets.
Belgian Premier Bart de Wever has expressed opposition to the plan, whose fate will be decided at a key summit on Dec. 18–19. Without further assistance, Kyiv will run out of cash by mid-2026.
The decision to keep a higher key rate "is essential to keep hryvnia assets attractive and the foreign exchange market stable, while anchoring expectations on the path toward the 5% inflation target," the bank said in a press release.
"It also reflects the ongoing pro-inflationary risks, especially those tied to future international financing," it said.
In the event that foreign support dries up, those reserves permit the central bank to keep supporting Ukraine's foreign trade.
The NBU's foreign reserves currently stand at $54.7 billion as of November, a record high.
This is the sixth consecutive vote to hold the NBU's policy rate at 15.5%, after it was raised from 14.5% to 15.5% in March 2025.
According to a survey of market participants conducted by Ukrainian investment company ICU in the lead-up to the decision today, while 75% of people believed the NBU would hold the rate steady, over half said that they would cut the rate if they were in charge.
In the NBU's inflation report in October, the central bank forecasted 9.2% inflation by the end of December. Inflation is already near that target.
Ukraine has witnessed two significant bouts of inflation since the full-scale invasion.
Inflation rose to 26.6% in October 2022 from 10.0% on the eve of Russia’s full-scale invasion. The bank responded by raising the key rate from 10.0% to 25.0% in June 2022, where it remained until July 2023.
A second bout of inflation peaked at 15.9% in May 2025, driven by a poor harvest in 2024, higher energy and labor costs, and robust consumer demand.
The key rate has not fallen below 13% since the full-scale invasion.
