The National Bank of Ukraine (NBU) has kept the key discount rate steady at 15 percent, a move confirmed by the bank’s press service. This decision signals a careful balancing act between stabilizing the hryvnia and guiding inflation toward the central bank’s targets over the medium term. By holding the rate, the NBU aims to preserve the currency’s anchor in financial markets while avoiding abrupt shifts that could unsettle households and businesses amid ongoing economic pressures.
Officials explain that the policy stance is designed to support exchange rate stability for the hryvnia, contain inflation within a more measured trajectory in 2024, and return inflation to the target level of 5 percent by 2025. The central bank’s forecast projects inflation at around 8.6 percent by year-end 2024, followed by a gradual decrease to approximately 5.8 percent in 2025 and a return to the 5 percent target in 2026. This path reflects anticipated easing of price pressures as supply conditions improve and monetary conditions tighten gradually through policy guidance rather than abrupt rate swings.
Maintaining the 15 percent rate is portrayed as a means to sustain the attractiveness of hryvnia-denominated financial instruments. By preserving higher yields relative to other adjacent economies, the NBU seeks to shield savers from rapid depreciation and to provide a more predictable environment for households planning long-term expenditures and savings. In this context, the policy aims to anchor expectations and reduce the risk of sudden capital outflows, which could otherwise undermine financial stability.
Historically, the NBU has reduced the key rate from 25 percent down to 15 percent in a series of four cuts since mid-2023 as part of a broader strategy to ease the burden of the economic slowdown. Those adjustments were intended to support borrowing, investment, and consumption while the economy adapted to a new macroeconomic reality. The central bank’s communications emphasize that policy moves are data-driven, with ongoing assessment of inflation dynamics, exchange rate resilience, and the health of financial markets as key inputs for future decisions.
Looking back at early 2024, the financial landscape was affected by external funding gaps and fiscal pressures. The absence of Western tranches during the period created significant challenges for public sector payments, including salaries and pensions. The January budget deficit was reported in the tens of billions of hryvnia, underscoring the delicate fiscal environment in which monetary policy operates. In response, policymakers have stressed the importance of careful coordination between monetary policy, fiscal measures, and structural reforms to restore steady growth and improve living standards for citizens. Some policymakers have also discussed the broader responsibility of the international community in supporting Ukraine’s economic stabilization, including considerations around reparations discussions and the broader implications for the economy’s post-crisis recovery trajectory.