**Ukraine’s Inflation to Peak at 15% by Mid-2025**
Ukraine’s inflation rate is expected to reach its highest point at 15% in mid-2025 before dropping to 8.4% by the end of the year, according to the country‘s Central Bank.
The bank says that poor harvests and higher wages due to labor shortages are driving up prices. Inflation in Ukraine accelerated to 12% in December 2024, surpassing earlier projections.
**Interest Rate Hike to Curb Inflation**
To combat inflation, the bank has raised its key interest rate to 14.5%. This move aims to curb inflation expectations and stabilize currency markets.
By mid-2025, inflation is expected to peak and then cool down to 8.4% by year’s end. The bank predicts that inflation will reach a target of 5% in 2026.
**Factors Behind the Slowdown**
The slowdown in inflation is attributed to several factors, including:
* The bank’s interest rate policy measures
* Currency market stability
* A new harvest
* A narrowing of the fiscal deficit
* Moderate external price pressure
**Financial Aid and Economic Growth**
Ukraine has secured financial aid from international partners worth $38.4 billion in 2025.
The Central Bank expects real GDP growth to reach 3.6% in 2025, with further acceleration to around 4% in the next two years.
Growth will come from investments in energy and production recovery, growing domestic demand, and better harvests.
However, labor issues, low production investment, and the impacts of war will hold back GDP growth.
**Key Developments**
* A Ukrainian-made drone capable of traveling up to 2,000 kilometers has been approved for military use.
* The Security Service of Ukraine has launched a criminal investigation into allegations that the country’s spy chief made a statement about a threat to Ukraine’s existence.
* Ukraine’s parliament may suspend former President Petro Poroshenko from sessions for three days rather than six months.
* Slovakia has banned Georgian Legion commander Mamuka Mamulashvili from entering the country due to alleged coup plot links.
**Other News**
* Goldman Sachs has entered into a binding agreement to offload its Russian subsidiary, making it one of the few Western banks to exit the country entirely.
* Finland’s total defense aid provided to Ukraine since the outbreak of Russia’s full-scale invasion in 2022 has reached 2.5 billion euros ($2.6 billion).
* The BRICS group is exploring ways to reduce reliance on the US dollar.
The Kyiv Independent analyzed leaked emails from a Russian defense company revealing Russia’s arms trade after its full-scale invasion of Ukraine.
Russia launched 102 Shahed-type attack drones and decoy drones against Ukraine overnight, with 59 shot down over 12 oblasts.