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Ukraine Central Bank Lifts Rate to 16 Percent

By Markets Desk · 2026-09-17 · 1 min read
A central bank building facade with a flagpole
Illustration: Tradingbird

The National Bank of Ukraine raised its key policy rate to 16 percent on Thursday. This marks the second increase in recent months as inflation persists.

The National Bank of Ukraine raised its key policy rate to 16 percent on Thursday. The previous rate stood at 15.5 percent. This decision follows a 0.5 percentage point hike in July. The central bank aims to contain inflationary pressures. Higher fuel prices are a primary driver of this trend. Escalating conflict in the Middle East contributes to rising global energy costs.

Inflation Exceeds Forecasts

Consumer inflation accelerated to 8.1 percent year-on-year in August. This figure slightly exceeded the central bank's forecast. NBU Governor Andriy Pyshny noted that underlying price pressures remain elevated. Business production costs continue to rise. Energy, logistics, and labor expenses are key factors. Inflation expectations among economic agents also remain high.

Global Monetary Tightening

Other central banks are also responding to inflationary environments. The European Central Bank raised its three key interest rates by 25 basis points. The US Federal Reserve increased its target rate range to 3.75 percent to 4.0 percent. This move came from a previous range of 3.5 percent to 3.75 percent. The Bank of England held its interest rates steady at 3.75 percent. These actions reflect a broader global trend toward tighter monetary policy.

Fiscal Challenges and Reserves

Ukraine faces significant fiscal challenges due to lower-than-expected official financing. The government is pursuing a tighter fiscal policy in response. International reserves have declined as a result. The NBU notes that ample domestic food supply helps constrain inflation. Black Sea shipping difficulties complicate grain exports. The bank expects inflation to slow in 2027. This projection assumes continued monetary tightening and fiscal discipline.

The labor market remains resilient despite ongoing attacks. Average wages continued growing at a high pace in July and August. This wage growth adds to underlying price pressure. The government is working on financing a war-driven budget deficit. This includes using collateral from Russia's immobilized assets. A possible second Extraordinary Revenue Acceleration loan is also under consideration. The first ERA loan was signed at the end of 2024. It was created from profits generated from Russian assets worth $50 million.

Based on reporting by Kyiv Post, compiled by the Tradingbird desk.

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