National Bank of Ukraine leaves rates unchanged in July

Rates remain at near two-year high: At its meeting on 24 July, the National Bank of Ukraine (NBU) decided to maintain its key policy rate at 15.50% for the third consecutive month, in line with market expectations. As such, the policy rate remained at the highest level since November 2023.

Risk balance guides rate hold: On the one hand, the NBU saw no need for a rate hike as inflation ticked down in June, inflation expectations have come in below the observed price level, and the hryvnia has seen little volatility against the USD. Moreover, the Bank cut its 2025 GDP growth forecasts from 3.1% previously to 2.1%. On the other hand, no room was left for interest rate cuts: June’s decline in inflation was slower than expected, and short-term upside risks to prices remain, including adverse weather hitting food supply further.

In its forward guidance, the NBU said that it “will stick to a rather tight monetary stance as long as it is needed” to bring inflation to its 5.0% target. Additionally, the Bank now forecasts rates to remain at current levels until Q4 and will reduce them more slowly than it had projected in April. In line with this, our panelists anticipate rates to remain on hold through Q3, with most expecting 50–250 basis points of cuts by December. A small minority, however, projects rates to remain at or rise above current levels by year-end. The Bank will reconvene on 11 September.

Consensus Forecasts and Projections for the next ten years

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Ukrainian interest rate projections for the next ten years from a panel of 17 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Ukrainian interest rate.

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