The National Bank of Ukraine (NBU) has reduced its key interest rate from 15.5% to 15%, effective January 30, 2026. This decision marks the beginning of a cycle aimed at easing monetary policy, reflecting a consistent decrease in inflationary pressures and reduced risks associated with external financing.
In a statement released on January 29, the NBU noted that the rate cut aligns with its goal of achieving a 5% inflation target while simultaneously supporting economic growth. The bank emphasized its commitment to adapt flexibly to changing risk distributions.
The reduction in the interest rate has been facilitated by a decline in price pressures, aided by the central bank’s monetary policy measures. The NBU anticipates that this decision will foster further adaptation of the economy to the challenges posed by the ongoing war, particularly by bolstering the credit growth that has exceeded 30% year-on-year in recent years.
Despite the easing of the interest rate, the NBU maintains that monetary conditions will remain sufficiently tight to ensure the stability of the currency market and to continue driving inflation down to the targeted 5%.
The NBU’s January macroeconomic forecast suggests a gradual decrease in the key interest rate over the projected horizon. However, the bank will refrain from further easing if risks to price dynamics intensify.
Currently, the NBU reports a slowdown in core inflation to 8% year-on-year, attributed mainly to higher crop yields and a reduction in labor market pressures, alongside a stable currency market situation. The bank expects this trend of declining inflation to persist in the coming months.
Nonetheless, economic growth remains subdued due to the impacts of the war. The NBU has slightly lowered its forecast for real GDP growth in 2025 to 1.8%, citing disruptions in logistics and a greater-than-expected energy deficit in recent months.
Looking ahead, the NBU anticipates that gradual improvements in the energy sector, ongoing infrastructure reconstruction, and increased private investment will contribute to accelerating economic growth to around 3-4% by 2027 and 2028.
In October 2025, the NBU had projected a 2% GDP growth for 2026, influenced by security risks and energy supply shortages.
The National Bank of Ukraine has lowered its key interest rate in response to declining inflation and aims to support the economy amid ongoing challenges. The bank expects gradual improvements in various sectors to foster future growth.
Source: Radio Svoboda