NBU raises key policy rate by 0.5 pp to 13.5%

The Board of the National Bank of Ukraine has decided to raise the key policy rate by 0.5 pp to 13.5%.

The NBU has said this in a statement, the Ukrainian News agency reports.

Inflation accelerated to 11.2% year-on-year in November.

On the one hand, the consequences of limited food supply due to this year's poor harvests remained a significant driver of price growth.

It is expected that the impact of this factor on inflation should level out next year with the new harvest.

On the other hand, the inflationary surge is increasingly acquiring fundamental characteristics, which is confirmed by the further acceleration of core inflation (to 9.3% y/y in November).

The latter is related, in particular, to an increase in production costs, including electricity and labor costs, as well as exchange rate effects due to the weakening of the hryvnia in previous periods. Inflation expectations currently demonstrate relative stability, but the risk of their imbalance is increasing against the background of increased public attention to inflationary processes.

As the Ukrainian News agency earlier reported, in March 2021 the NBU raised the key policy rate to 6.5%, in April - to 7%, in July - to 8%, in September - to 8.5%, in December - to 9%, in January 2022 - to 10%, in June 2022 - to 25%.

In July 2023, the NBU reduced the key policy rate from 25% to 22%, in September - to 20%, in October - to 16%, in December - to 15%, in March 2024 - to 14.5%, in April - to 13.5%, in June - to 13%.

At the same time, the Board of Directors of the Bank of russia on October 25 decided to increase the key rate by 200 bp to a record 21.00% per annum.

The next meeting of the Board of Directors of the Bank of russia is scheduled for December 20.

It is expected that the key rate may increase to 23%.

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