2025.10.2311:26:29UTC+00NBU Holds Key Rate at 15.5% Amid Persistent Inflation Risks

During its October meeting, the National Bank of Ukraine decided to maintain its key policy rate at 15.5%. This decision keeps borrowing costs at their highest level since November 2023, in response to persistently high inflation expectations and increasing inflationary pressures. The heightened risks are notably driven by escalating energy shortages and rising budgetary demands. In September, consumer inflation decelerated to 11.9% year-on-year from 13.2% in August, and policymakers believe that this downward trend continued through October. However, inflation levels remain well above the central bank's target of 5%, with ongoing underlying price pressures and a gradual easing of core inflation. The inflation expectations among most groups surveyed have shown minimal improvement over the last quarter, highlighting the continued impact of the war. Looking forward, the central bank anticipates commencing interest rate reductions in the first quarter of 2026, although they cautioned that this timeline might be postponed if pro-inflationary risks escalate or underlying price pressures remain substantial.