National Bank downgrades GDP growth forecast below 2%, keeps key policy rate unchanged

The National Bank of Ukraine has kept its discount rate at 15.5% for the fifth consecutive time, citing high inflation risks and the need to maintain the attractiveness of hryvnia assets. At the same time, the regulator downgraded its forecast for economic growth in 2025 to 1.9% due to problems in the energy sector and a labor shortage, according to website NBU.

The NBU explained its decision to keep the rate unchanged by the fact that although consumer inflation slowed to 11.9% in September, underlying price pressures remain persistent.

Core inflation fell to only 11.0%, while inflation expectations of households and businesses did not improve much over the last quarter.

Inflationary risks remain high, in particular due to the growing energy deficit after the recent shelling of infrastructure and increased budgetary needs. High business costs for labor and energy also put pressure on prices.

The NBU said it will start cutting the key policy rate no earlier than the first quarter of 2026. If inflation risks increase, this deadline may be postponed.

According to the regulator's forecast, inflation will decline to 9.2% in 2025, to 6.6% in 2026, and will reach the target level of 5% only at the end of 2027.

Economic growth is projected at 1.9% in 2025 (previously 2.1%), 2% in 2026 (previously 2.3%) and 2.8% in 2027 (unchanged).

• The key policy rate is a key indicator of the value of money in a country, on which interest rates for loans and deposits depend.
• After the war started, it was sharply increased from 10% to 25%, and remained at this level until July 2023. Then, due to a significant slowdown in inflation , the NBU began to gradually reduce the rate, until in December 2023 it dropped to 15%.
• In March 2024, the NBU resumed its reduction, but in December began to raise it again .
• Since March 2025, it has been at 15.5%.