Ukraine central bank hikes interest rates by 50 basis point

By Tuba Ongun

The National Bank of Ukraine on Thursday increased its key policy rate by 50 basis points to 13.5% in its December meeting.

After keeping the rate constant at 13% for three consecutive meetings, the central bank hiked the rate for the first time since June 2022.

The decision is designed to maintain the stability of Ukraine's foreign exchange market, anchor inflation expectations, and bring inflation down to the target of 5%.

The bank noted that inflation has been rising faster than the bank's forecast in recent months.

According to the latest data, the annual inflation rate in Ukraine accelerated to 11.2% in November, the highest level since July 2023.

In June 2022, the bank raised its interest rate to 25% from 10% to protect households’ income and savings in the national currency hryvnia, raise the attractiveness of hryvnia assets, reduce pressure on the foreign exchange market, and restrain inflation processes during the war.