**Ukraine’s Central Bank Raises Key Policy Rate**
The National Bank of Ukraine (NBU) has decided to raise its key policy rate from 14.5% to 15.5% per annum, starting from March 7. This move is aimed at maintaining the “attractiveness of savings” in the hryvnia currency and keeping expectations under control.
**Reason for the Hike**
The Ukrainian economy was severely affected by Russia’s full-scale war. Inflation skyrocketed to 26.6% in 2022 from 10.0% in 2021, but subsided the following year. However, in 2024, inflation accelerated to 12%, exceeding the NBU’s forecast.
**Maintaining Stability**
According to NBU Chairman Andrii Pyshnyi, the decision aims to maintain stability and control expectations, which will help bring inflation down to 5%. The central bank has also warned that it may take additional measures if further risks to price dynamics and inflation expectations arise.
**Previous Rate Changes**
The NBU had previously raised its key policy rate from 10% in January 2022. It remained unchanged until June 3, 2022, when the rate grew to 25%. The rate then dropped to 22% in July 2023 and gradually declined before being raised again in December 2024.
**Global Economic Trends**
The central bank has expressed concerns about global economic trends, citing increased risks of less favorable foreign economic developments due to geopolitical polarization and fragmentation of global trade. However, it believes that the amount of external support confirmed for 2025 should be sufficient to finance the budget deficit without issuing new debt.
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