On January 23, the NBU raised its key rate by one percentage point to 14.5% to curb inflation.
This decision is aimed at maintaining the stability of the foreign exchange market, keeping inflation expectations under control, reversing the inflation trend and gradually slowing inflation to 5%.
The regulator explained that in December 2024, inflation accelerated to 12%, which exceeded the NBU’s October forecast, primarily due to temporary factors (including worse than last year’s harvests).
The transition of inflation to a double-digit level has a negative impact on the inflation expectations of the population and business. This also leads to a decrease in the real profitability of hryvnia savings instruments.
Increasing the discount rate will help ensure adequate protection of hryvnia savings from inflation and maintain public interest in hryvnia assets. This will lead to reduced pressure on the foreign exchange market and prices.
Along with the discount rate, rates on overnight certificates of deposit, three-month certificates of deposit and refinancing loans are increased by 1% – to 14.5%, 17.0% and 17.5%, respectively.
The NBU predicts a further increase in the discount rate to curb inflation and return to the target of 5% in 2026.
Source: Racurs
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