inflation-is-rising-but-the-nbu-is-not-lowering-the-rate-what-the-national-bank-decided

## NBU keeps rate unchanged despite rising inflation: economists explain reasons The National Bank of Ukraine (NBU) decided to keep its key policy rate unchanged at 13.5% per annum. This decision was made despite the acceleration of inflation, which in May reached 2.7% in monthly terms and 15.3% in annual terms. Economists point to several reasons why the NBU decided to maintain the status quo: * Focus on economic recovery: The NBU is trying to balance the need to curb inflation with the need to support economic recovery. Raising the key policy rate could slow down economic growth, which is still fragile after the shock of the full-scale invasion. * Exchange rate stability: Maintaining a stable exchange rate remains a priority for the NBU. A sharp increase in the key policy rate could lead to an appreciation of the hryvnia, which would negatively affect the competitiveness of Ukrainian exports. * Fiscal policy coordination: The NBU is coordinating its monetary policy with the government's fiscal policy. The government is implementing measures to reduce the budget deficit, which should help to curb inflation. * Lagged effect of previous rate hikes: The NBU has already raised the key policy rate several times in the past year. These rate hikes are expected to have a lagged effect on inflation. * Expectations of lower inflation in the future: The NBU expects inflation to slow down in the coming months due to a number of factors, including a decrease in global energy prices and an improvement in supply chains. However, economists warn that the NBU may have to raise the key policy rate in the future if inflation continues to accelerate. The NBU will closely monitor inflation data and adjust its monetary policy accordingly.

June 16, 2025 at 10:44 AM • 3042 переглядiв

In May, inflation in Ukraine exceeded 15%, and the National Bank decided not to lower the discount rate. This is reported by UNN with reference to the NBU press service.

Details

Members of the NBU Monetary Policy Committee discussed why inflation is rising and whether the discount rate should be changed. They believe that the main reason is the weather, which spoiled the harvest of early vegetables.

The fundamental inflationary pressure was assessed as close to expectations, but still quite stable against the background of strong consumer demand and high business costs for raw materials and labor - the NBU noted.

According to members of the committee, the hryvnia remains stable due to previous NBU decisions that made hryvnia instruments more attractive and demand for foreign currency lower.

They also added that Ukraine's reserves have grown to almost $47 billion and remain high.

The situation in the energy sector is improving: gas production has resumed, and electricity is becoming cheaper on European markets, which also slightly restrains prices.

Additionally

The Monetary Policy Committee only advises - the decision is made by the NBU Board. However, it is the opinion of the MPC that is taken into account when voting for the rate.