Ukraine: National Bank of Ukraine keeps key policy rate on hold in March
NBU pauses easing cycle: At its meeting on 19 March, the National Bank of Ukraine (NBU) decided to keep its key policy rate unchanged at 15.00%, pausing an easing cycle that had started with a 50 basis point cut at its previous meeting in January. The hold was in line with market expectations.
Looming inflationary pressure prompts hold: The Central Bank’s decision was primarily driven by the risk of an increase in inflation amid the Middle East conflict, uncertainty over external funding and rising inflation expectations. In February, headline inflation rose to 7.6%—the first increase since May 2025—while core inflation remained unchanged from January. Meanwhile, households’ inflation expectations increased due to intensified power shortages and concurrent price increases for fuel and raw foods.
Easing cycle likely to resume unless upside risks persist: The NBU said that it will refrain from easing its key policy rate further if significant inflationary risks persist. Additionally, it stands ready to raise the key policy rate if those risks intensify. Still, the vast majority of our panelists expect the NBU to cut rates by an additional 50–400 basis points by the end of this year, while a minority has switched their projections to a hold. The next meeting is scheduled for 30 April.
Panelist insight: On the outlook, Andrew Matheny and Johan Allen from Goldman Sachs commented:
“[The NBU] delivered relatively hawkish guidance, stating that if ‘risks to price dynamics persist’, it will stay on hold, or even raise its policy rate. We think Ukraine’s ~7% real rate buffer prevents the NBU from needing to hike for the time being, but we expect it to remain on hold until Q3, with risks tilted towards it keeping rates unchanged for even longer if geopolitical uncertainty does not decline.”