“The Board of the National Bank of Ukraine announced the beginning of the cycle of softening of the interest rate policy”, — write: www.radiosvoboda.org
According to the report, the board of the NBU decided to start a cycle of softening of the interest rate policy, taking into account the steady decrease in inflationary pressure and the reduction of risks associated with external financing:
“The cut in the key rate from 30 January 2026 from 15.5% to 15% is consistent with bringing inflation to the 5% target over the policy horizon while supporting the economy. The NBU will continue to respond flexibly to changes in the distribution of risks.”
The balanced reduction of the discount rate, the regulator adds, became possible due to the reduction of price pressure with the support of the monetary policy measures of the National Bank.
The bank expects that the decision will contribute to the further “adaptation of the economy to the challenges of the war, in particular, it will support the dynamics of crediting, which has been growing in recent years at a rate of more than 30% y/y.” At the same time, monetary conditions are expected to be tight enough to maintain the stability of the foreign exchange market and reduce inflation to the 5% target.
The basic scenario of the January macroeconomic forecast of the National Bank foresees a gradual reduction of the discount rate over the forecast horizon. But the regulator will refrain from further softening of the interest rate policy in case of increased risks for price dynamics.
The NBU records a slowdown in core inflation to 8% in annual terms. This is explained primarily by the effects of higher harvests, as well as a certain decrease in pressure on the labor market and the preservation of a stable situation on the currency market. The decline in inflation is expected to continue in the coming months.
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At the same time, the bank points out that economic growth remains restrained due to the consequences of the war:
“Due to the destruction of logistics and a larger-than-expected electricity shortage in recent months, the NBU has slightly lowered its estimate of real GDP growth in 2025 to 1.8%.”
The National Bank assumes that the gradual improvement of the situation in the energy sector, the further reconstruction of infrastructure, as well as the increase of private investments will contribute to the acceleration of economic growth to about 3-4% in 2027 and 2028.
In October 2025, the National Bank evaluated likely 2% GDP growth in 2026 due to security risks and electricity shortages.
