The National Bank of Ukraine has begun a cycle of monetary easing, citing declining inflation and lower external financing risks. The move aims to support economic recovery while maintaining foreign exchange stability.
The National Bank of Ukraine (NBU) has reduced its key policy rate from 15.5% to 15%, effective 30 January 2026, marking the start of a monetary easing cycle.
This announcement was made on 29 January 2025.
The move reflects a steady decline in inflationary pressures and lower risks related to external financing, while supporting the economy and the central bank’s goal of reducing inflation to 5% within the policy horizon. The NBU will continue to respond flexibly to changes in the risk environment.
Inflation tends and outlook
Headline and core inflation in Ukraine slowed to 8% year-on-year in December 2025, driven by higher harvests, easing labour market pressures, and a more stable foreign exchange market. Consumer price growth is estimated to have continued slowing in January, although inflation expectations remain elevated.
Inflation in 2026 is projected to moderate to 7.5%, influenced by strong harvests but constrained by ongoing energy sector disruptions. Over the coming years, reduced energy shortages, lower external price pressures, and improved labour market conditions are expected to gradually lower inflation to 6% by end-2027 and reach the 5% target in 2028.
Economic growth amid wartime constraints
The Ukrainian economy strengthened in late 2025 due to active harvesting and higher budget spending, although logistics disruptions and electricity shortages reduced real GDP growth estimates for 2025 to 1.8%. Continued harvest growth and investment in infrastructure and the defence sector are expected to support a 1.8% GDP growth in 2026. Growth could accelerate to 3–4% in 2027–2028 as energy supply improves, infrastructure is rebuilt, and private investment increases.
External support and reserves
EU financial assistance of EUR 90 billion for 2026–2027 (Ukraine Support Loan), continued ERA Loans, and a new IMF programme worth USD 8.1 billion are expected to allow Ukraine to finance budget deficits without resorting to emission and maintain robust international reserves. NBU forecasts international reserves at USD 65 billion by end-2026, rising to USD 71 billion by end-2028, supporting foreign exchange stability and currency liberalisation measures.
Risks and policy flexibility
The ongoing war remains the main risk for inflation and economic development, with energy sector damage, additional defence and reconstruction spending, labour shortages, and global geopolitical fragmentation all affecting the outlook. Positive scenarios include increased military and financial support and progress toward peace. Utility tariff adjustments remain another key uncertainty affecting inflation.
The NBU noted that strong demand for hryvnia-denominated assets supported positive real returns, curbed foreign currency demand, and maintained exchange rate stability. Given lower inflation and reduced external financing risks, the NBU decided on a 0.5 percentage point rate cut to 15%, with other rates adjusted accordingly. Monetary conditions remain sufficiently tight to support credit growth and preserve foreign exchange stability.
The NBU Board approved the rate reduction under Resolution No. 27-rsh, effective from 30 January 2025.
