The decision aims to maintain the stability of the currency market, keep inflation expectations under control, reverse the inflation trend, and gradually reduce inflation to the target of 5%, according to the NBU's press release.
"Containing price pressure will likely require further tightening of monetary policy," the National Bank stated.
In December 2024, inflation unexpectedly accelerated to 12%. The depreciation of the hryvnia continued into January 2025, the regulator notes. The NBU attributes the rise in prices to poor harvests, increased business costs for raw materials, supplies, and electricity, as well as rising wages amidst a persistent labor shortage.
The peak of inflation is expected at the end of spring – beginning of summer, with a slowdown to 8.4% by the end of the year, and to the target of 5% in 2026, according to the National Bank.
Along with the key interest rate, deposit rates for overnight certificates, three-month deposit certificates, and refinancing loans are increased by one percentage point – to 14.5%, 17.0%, and 17.5% respectively. The National Bank allows for further tightening of monetary policy in case of "persistent signs of inflationary pressure and risks of imbalance in inflation expectations."
The last time the NBU raised the rate was in December – from 13% to 13.5% per annum.