NBU takes another tightening step, raising key policy rate to 16% amid rising inflation pressure

UKRAINE - In Brief 18 Sep 2026 by Dmytro Boyarchuk

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The NBU Board made one more tightening step, raising the key policy rate by 0.5 pp to 16%, effective from September 18. Inflation accelerated to 8.1% y/y in August, slightly exceeding the NBU forecast, while higher-than-expected fuel prices amid the escalation in the Middle East and intensified Russian attacks on logistics, production and energy infrastructure added to inflationary pressures through rising business costs. FX pressure also remains an important part of the macro backdrop, although strong demand for hryvnia deposits and government bonds has so far helped contain it, while difficulties with exports through the Black Sea remain an important constraint for the economy. At the same time, the NBU explicitly notes that difficulties with crop exports through the Black Sea also have a positive impact on price dynamics, as larger domestic food supply should put downward pressure on food prices. Against this backdrop, the tightening decision looks quite logical. The NBU reaffirms its readiness to tighten monetary conditions further if risks to inflation and inflation expectations increase materially, but also notes that it could consider easing if a worsening security situation cools consumer demand and the labor market sufficiently. The next monetary policy meeting is scheduled for October 29, by which time Ukraine will already be entering the heating season amid elevated risks of further Russian attacks on energy infrastructure. Unless the balance of risks changes materially, it is hard to see how the NBU could soften monetary policy amid continuing Russian attacks on Ukraine’s energy, production and logistics infrastructure. Our expectation is that, at best, the...