Ukraine sharply raises interest rate to 25% from 10%; 1st increase since war with Russia

By Ovunc Kutlu

ANKARA (AA) - Ukraine sharply raised its interest rate to 25% from 10% on Thursday, tightening its monetary policy for the first time since Russia's war on the country.

The move is intended to protect households’ income and savings in the national currency, the hryvnia, raise the attractiveness of hryvnia assets, reduce pressure on the foreign exchange market and restrain inflation processes during the war, the National Bank of Ukraine said in a statement.

"A decisive rise in the key policy rate will spur investors’ interest in hryvnia assets, while also easing pressures on international reserves and reining in inflation," it said.

"At the same time, the disruption of production and logistics by the war is fueling inflation. High global energy prices also remain a significant inflationary factor, putting pressure on consumer inflation, both directly and indirectly, through higher production costs," it added.