National Bank of Ukraine keeps policy rate steady in June

Central Bank decision: At its meeting on 5 June, the National Bank of Ukraine (NBU) decided to leave its key policy rate at 15.50% for the second consecutive meeting.

Expectations of lower inflation drive decision: The hold was mainly motivated by the Bank’s belief that it has done enough for now to stem price pressures. The Bank stated that inflation should have peaked in May and disinflation should take hold from the summer onwards. The decision also aimed to anchor inflation expectations, which had deteriorated since the Bank’s last meeting. Moreover, the rise in downward risks to both Ukraine’s economy and the global economy—driven by recent and threatened U.S. tariff hikes—likely supported the Bank’s wait-and-see approach.

Monetary easing on the cards: The NBU indicated its intention to keep the key policy rate at 15.50% over the coming months and to start cutting rates after inflation peaks. That said, it also stated that it could tighten monetary conditions further if price pressures remain stuck markedly above the 5.0% target. Our Consensus is for the policy rate to end 2025 about 100 basis points below current levels. A small minority foresees rates remaining at current levels or higher at year-end.

Panelist insight: Commenting on the coming Central Bank decisions, EIU analysts said: “We expect the Bank to continue to hold interest rates in the coming months as it seeks to quash inflationary pressure. However, the NBU will remain highly sensitive to inflation and expectations in the interim, and although we see almost no probability of an interest-rate cut in the next few months, there is about a 40% chance of a further increase until there is clear data suggesting that inflationary pressures are beginning to ebb.”

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