NBU maintains key policy rate at 15% again and is ready to raise it

The National Bank of Ukraine has kept the key policy rate at 15% for the third consecutive time after lowering it to this level at the beginning of the year, the NBU reported on Thursday, UNN writes. 

The Board of the National Bank of Ukraine has decided to keep the key policy rate at 15%

This decision, the NBU explained, "ensures sufficient tightness of current monetary conditions, and also takes into account the brisk demand for hryvnia savings instruments and the easing of risks associated with the war in the Middle East and the insufficiency of external financing."

As noted, "the decline in oil prices observed against the backdrop of intensified diplomatic settlement of the war in the Middle East is a significant factor that will help reduce Ukraine's costs for energy imports and limit the growth of inflation. Taking into account also the expected intensification of external aid inflows and the continued steady demand for hryvnia assets, the NBU currently sees no expediency in tightening interest rate policy."

"At the same time, given the signs of increasing fundamental price pressure, the NBU is ready to raise the key policy rate if necessary to maintain control over inflation expectations and return inflation to a trajectory of steady decline to the 5% target," the statement reads.

The decision, as noted, will be based on the July macroeconomic forecast.

At the same time, the NBU pointed to a number of key conclusions:

• headline inflation in May slowed as expected under the influence of seasonal factors;
• inflation will remain near the current level over the coming months, accelerate at the end of the year, but will return to a slowdown in 2027;
• expected inflows of external aid will make it possible to finance the budget deficit and maintain a sufficient level of international reserves to ensure the stability of the foreign exchange market;
• the consequences of Russian aggression remain the main risk for inflation dynamics and economic development, however, developments in the Middle East could also have a significant impact;
• given the sufficient tightness of current monetary conditions, as well as the easing of risks associated with the war in the Middle East and Ukraine's progress in negotiations on external financing, the NBU is currently maintaining the key policy rate at 15%

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