Ukraine's central bank is anticipated to further cut its benchmark interest rate, following a significant decrease in inflation. The National Bank of Ukraine (NBU) is predicted to lower the rate by two percentage points to 20% on Thursday, according to economists surveyed by Bloomberg. This expected move follows the bank's policy of easing war-time tightening initiated earlier this year in response to a swift drop in inflation into single-digit territory.
The NBU had previously increased borrowing costs up to 25% in June 2022, as a direct response to Russia's invasion. However, the bank started reversing this policy in July when it cut the rate by three points for the first time since the conflict began. This marked the beginning of a series of measures aimed at mitigating the economic impact of the war and stabilizing the country's economy.
The current forecast suggests policymakers in Kyiv are continuing their strategy of reducing rates in an effort to stimulate economic growth and counteract the effects of geopolitical uncertainties. This latest interest rate cut, if confirmed, would represent another significant step towards normalizing monetary policy after a period of extraordinary measures designed to protect the Ukrainian economy from external shocks.
While these interest rate cuts are seen as a sign of economic recovery and stability, they also underline the challenges Ukraine faces as it navigates through post-war economic adjustments and strives for sustainable growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.