Ukraine Central Bank Rate Raised by a Percentage Point – Currency Thoughts

Ukraine Central Bank Rate Raised by a Percentage Point

January 23, 2025

Ukraine’s geopolitical fate will depend critically on President Trump’s modification of U.S. support. To paraphrase Lady Macbeth, “the attempt and not the deed confounds him.” Trump appears predisposed to pulling the plug, but the risk of a messy exit a la Biden’s withdrawal from Afghanistan may warrant a more nuanced approach. Monetary policy in Ukraine remains hostage to developments in the war with Russia, which continues to pose significant threats to inflation and currency stability in the besieged country. CPI inflation had receded from 26.6% at the end of 2022 to 3.2% last March and April but has re-accelerated to an 18-month high 12.0% as of last month. In response, officials at the National Bank of Ukraine, who had lifted their policy interest rate to a peak of 25% but then cut such seven times between July 2023 and June of last year by a total of 12 percentage points, had felt compelled to hike the rate by 50 basis points last month and another 100 basis points to 14.5% today. And they are not done: today’s statement explaining the move projects, “the NBU’s updated macroeconomic forecast envisages further key policy rate hikes to curb inflation.”

Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: National Bank of Ukraine

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