Ukraine raises key interest rate to 13.5% amid rising inflation

Ukraine raises key interest rate to 13.5% amid rising inflation

Ukraine raises key interest rate to 13.5% amid rising inflation / bne IntelliNews

By bne IntelliNews December 16, 2024

The National Bank of Ukraine (NBU) has raised its key interest rate from 13% to 13.5% per annum, citing accelerating inflation and the need to stabilise inflation expectations.

The decision follows a surge in annual inflation to 11.2% in November, up from previous months, with core inflation – which excludes volatile items such as food and energy – also accelerating to 9.3%.

"The inflationary surge is increasingly acquiring fundamental characteristics," the central bank said in a statement, warning that public focus on rising prices could destabilise inflation expectations.

Despite current inflationary pressures, the NBU expects price growth to slow in 2025, moving closer to its 5% target. It cited the anticipated continuation of sufficient international financial assistance next year, which should allow for emission-free financing of the budget deficit and support for a stable foreign exchange market.

However, the NBU emphasised that the ongoing war remains the primary risk to inflation dynamics and economic recovery.

The central bank indicated that it would maintain a tightening bias, with further interest rate hikes likely at upcoming Monetary Board meetings if inflationary pressures persist or inflation expectations become imbalanced.

"The NBU will continue to respond decisively to signs of sustained inflationary pressure to ensure economic stability," it said.

#macro #Ukraine #inflation #macro #bneChart

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