NBU Raises Key Policy Rate to 13.5%
Date:2024-12-13View:121Tags:hot rolled stainless coil,welded pipes,"316L sheet"
Market Expectations Were for a Rate Hold at 13%
On December 12, the National Bank of Ukraine (NBU) announced an increase in the key policy rate by 0.5 percentage points, raising it to 13.5% per annum. This decision, outlined in the regulator's press release, surprised the market, which had anticipated the rate would remain at 13%.
The NBU stated that the rate hike aims to stabilize the foreign exchange market, anchor inflation expectations, and gradually reduce inflation to its 5% target.
In recent months, inflation has exceeded the NBU’s forecasts. In November, annual inflation accelerated to 11.2%, with core inflation reaching 9.3% year-on-year. The regulator predicts inflation will continue to rise in the short term due to factors such as food supply constraints, increased government spending, significant wage growth, and energy shortages during the heating season.
However, the NBU expects inflation to decelerate over time as energy sector conditions improve and agricultural yields increase. These developments, combined with the NBU’s monetary policy measures and an anticipated reduction in external price pressures, should help ease inflationary pressures.
The key policy rate hike is intended to control inflation expectations and ensure real yields on hryvnia-denominated instruments remain attractive.
The NBU also highlighted that the ongoing full-scale war remains the primary risk to inflationary dynamics and broader economic stability.
This decision follows a series of policy rate changes by the NBU. After cutting the rate to 13% in June 2024, the regulator opted to maintain this level on October 31, 2024, with plans to keep it steady until the summer of 2025. Previously, it had considered easing the rate in the first quarter of 2025.
Meanwhile, Ukraine's trade turnover reached $101.9 billion between January and November 2024, according to the State Customs Service. Over the 11-month period, imports totaled $63.6 billion, while exports amounted to $38.3 billion.
