Monetary policy: NBU raises key policy rate to 15.5% in a preventive move amid rising risks

UKRAINE - In Brief 30 Jul 2026 by Dmytro Boyarchuk

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The NBU Board raised the key policy rate by 0.5 ppt to 15.5%, effective 31 July. This was the first rate increase since the beginning of the year. Recall that in January the NBU cut the rate from 15.5% to 15.0%, signalling the start of an easing cycle. However, no further easing followed since the rate remained unchanged at 15% for six months, and the NBU has now reversed course and even signalled that additional monetary tightening may be necessary. The reasons for this abrupt reversal are not immediately obvious from the NBU’s press release. Inflation has been easing, tensions with the IMF have subsided, EU financing is flowing in, and gross international reserves are projected to reach USD 70 billion by the end of the year. Nevertheless, some combination of the traditional risks listed by the NBU appears to have made the central bank sufficiently nervous to raise the rate and outline the possibility of further tightening. Persistent pressure on the FX market has clearly played a role. The NBU is due to release detailed data on the June external accounts tomorrow, which should provide more insight into the substantial turbulence on the FX market during the month. However, depreciation pressure on the hryvnia appears to be only part of the story. From 1 July, the EU introduced restrictions on imports of Ukrainian metal products, which some experts estimate could halve Ukraine’s metallurgy exports. On top of that, Russia has intensified air strikes on Ukrainian seaports, threatening agricultural, metals, and iron ore exports and, consequently, export proceeds in the second half of 2026. Another risk is a possible intensification of mobilization in response to Russia’s ...