National Bank of Ukraine leaves rates unchanged in October

Bank stands pat: At its meeting on 23 October, the National Bank of Ukraine (NBU) decided to maintain its policy rate at 15.50% for the fifth consecutive meeting. As such, the policy rate remained at the highest level since November 2023.

Monetary policy remains tight to curb sturdy inflation: The Central Bank's decision was primarily influenced by the need to curb persistent inflation and anchor inflation expectations, despite slowing price pressures. High energy and labor costs, linked to the Russia-Ukraine conflict, continue to fuel inflation, while GDP growth remains moderate. Moreover, international support continues to sustain the economy by helping to finance the budget deficit and bolstering international reserves.

Bank to cut by end-2025: The National Bank of Ukraine indicated that it plans to start cutting the policy rate in the first quarter of 2026, but this is contingent on the inflationary outlook. If pro-inflationary risks intensify, particularly due to underlying inflation pressures, the Bank is prepared to postpone these rate cuts. That said, the majority of our panelists currently expect a rate cut at the last meeting of 2025 on 11 December.

Panelist insight: Commenting on the outlook, Andrew Matheny and Johan Allen, analysts at Goldman Sachs, stated: “Our inflation forecast is materially weaker than the NBU's, and for this reason, we have pushed back our forecast for the start of the cutting cycle to December, but are projecting cuts at the same pace as before.”

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