**Ukraine’s National Bank Raises Key Policy Rate**
The Ukrainian National Bank (NBU) has announced that it will increase the key policy rate from 13.5% to 14.5% per annum, starting from January 24. This decision was made to maintain stability in the foreign exchange market and control inflation.
**Inflation Concerns**
Ukraine’s economy has been heavily affected by Russia’s full-scale war. In 2022, inflation skyrocketed to 26.6%, and while it subsided in 2023, it accelerated again in 2024 to 12%. The NBU had forecast a lower inflation rate, but the actual numbers exceeded their expectations.
**Future Plans**
The NBU plans to continue tightening interest rates if there are signs of sustained inflationary pressure and an imbalance in inflation expectations. According to forecasts, inflation is expected to rise in the first months of 2025, peak in the second quarter, and then start to decline in the middle of the year.
**Economic Challenges**
The NBU’s statement mentioned several factors that will support a decrease in inflation, including higher harvests, an improvement in the energy sector, a reduction in the fiscal deficit, and moderate external price pressure. The bank aims to bring inflation down to 5% by 2026.
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