The NBU hinted at its readiness to further increase the key interest rate to combat inflation.

The National Bank will continue to utilize the key interest rate and maintain the stability of the currency market to bring inflation down.

This was stated by the Director of the Monetary Policy and Economic Analysis Department of the NBU, Vladimir Lepushinsky, in a column for "RBK-Ukraine".

"Recognizing the risks of accelerating inflation, the NBU halted the cycle of lowering the key interest rate back in mid-2024. In December, it shifted to raising the key interest rate and hinted that it would continue to use this tool to curb inflation. Another important measure is maintaining the stability of the currency market," Lepushinsky noted.

He added that the stability of the currency market does not imply an unchanging exchange rate. The exchange rate of the hryvnia will continue to reflect changes in the balance between supply and demand for currency. At the same time, the exchange rate dynamics will align with the NBU's goal of bringing inflation down to 5% over the forecast horizon. To achieve this, fluctuations in the exchange rate should be moderate.

Lepushinsky reminded that the National Bank has sufficient resources to maintain the stability of the currency market. The volume of international reserves reached a record level by the end of 2024, exceeding $43.7 billion. The reserves will continue to be replenished with international aid, the uncertainty regarding which has significantly decreased for 2025.

A representative of the National Bank also explained that despite the temporary nature of the current inflation acceleration, the central bank must respond. Inflation becomes a problem when expectations regarding future inflation begin to become unbalanced. This leads to a decrease in the expected real yield of financial instruments in hryvnias and, as a result, to higher and more persistent inflation.

It is worth noting that since December 13, 2024, the National Bank of Ukraine raised the key interest rate from 13.0% to 13.5% per annum. This was the first increase since July 2023. As NBU head Andrey Pyshny stated at the time, the decision to raise the key interest rate aimed to maintain the stability of the currency market, keep inflation expectations in check, and gradually slow inflation to the target of 5%.

According to State Statistics, consumer prices in Ukraine rose by 1.9% in November 2024. Annual inflation accelerated to 11.2%.

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