29.01.202612:21:06UTC+00Ukraine Cuts Interest Rate to 15%

The National Bank of Ukraine has initiated a gradual relaxation of its monetary policy by reducing the key interest rate by 50 basis points to 15% in January 2026. This decision reflects diminishing inflationary pressures and a reduced risk in external financing. Despite these changes, the bank remains focused on guiding inflation back to its medium-term target of 5%. By the end of 2025, inflation had decelerated to approximately 8% year-on-year, attributed to robust agricultural yields, alleviated labor market pressures, and a stable foreign exchange market. It is anticipated that inflation will continue to decline into early 2026 before temporarily rising in the latter half due to disruptions in the energy sector and low base effects, eventually ending 2026 around 7.5%. The forecast projects a decrease to 6% in 2027 and a further decline to the target of 5% by 2028. Economic growth has been modest, primarily due to ongoing conflict, remaining at about 1.8% for 2025–2026. However, it is expected to gather momentum, reaching 3–4% in 2027–2028, as efforts in reconstruction, increased investment, and energy sector recovery advance.