National Bank of Ukraine maintains policy rate in April

NBU’s 2026 easing cycle has ended: At its meeting on 30 April, the National Bank of Ukraine (NBU) decided to keep its key policy rate unchanged at 15.00%, in line with market expectations. Coupled with revised rate forecasts, the decision likely marks the end to a short-lived easing cycle, which consisted of a single 50 basis point cut in January.

Inflation points up amid energy crisis: After declining for eight months, inflation rose for the second consecutive month in March, driving the NBU’s decision not to cut rates any further. The causes of higher price pressures have included intensified Russian air strikes on the energy grid early in the year, higher oil and gas prices amid the U.S.-Iran war, a weakening hryvnia and faster-than-expected wage growth. Annual inflation in March, in particular, reached 7.9%, exceeding the Bank’s previous forecasts, and is not seen declining on a sustained basis until 2027 due to both direct and second-round effects of elevated energy prices. That said, the Bank ruled out an immediate hike due to two factors: GDP growth slowed to a near halt in Q1, according to the NBU’s estimates, weakening the full-year growth outlook for 2026; moreover, EUR 90 billion in EU funds were unblocked in April, supporting the Ukrainian hryvnia.

NBU projects rates to remain on hold until Q2 2027: Looking ahead, the NBU indicated that the key policy rate is expected to remain unchanged until Q2 2027. The Bank also stated its readiness to implement additional measures, including raising the key policy rate, should inflationary pressures intensify. Still, most of our panelists expect cuts to resume toward year-end as the Iran war ends. The NBU will reconvene on 18 June.

Panelist insight: EIU analysts commented on the outlook: “With EU funding secured, and assuming the conflict in the Middle East draws to a relatively swift close in the coming weeks, we expect that the NBU will have space for further easing in the second half of the year. We thus expect interest rates to end the year at 13.5% and to average 14.5% over the year, although this forecast is subject to elevated uncertainty.”

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