Ukraine's central bank raises key rate to 16% as inflation overshoots forecast
The National Bank of Ukraine lifted its key policy rate by 0.5 percentage points to 16%, the second consecutive hike, citing sustained inflationary pressure and war-related supply shocks. Consumer inflation accelerated to 8.1% year-on-year in August, slightly above the NBU's July forecast, driven by fuel prices linked to Middle East escalation and higher administrative tariffs after Russian strikes on infrastructure.
Key points
- NBU raised the key policy rate from 15.5% to 16%, a 0.5 percentage point increase
- It is the second consecutive rate hike; the rate had stood at 15.5% since July 2026
- Consumer inflation reached 8.1% year-on-year in August 2026, above the July forecast trajectory
- Drivers included faster-than-expected fuel price rises amid Middle East escalation and higher administrative tariffs after Russian strikes on critical infrastructure
- NBU forecasts end-2026 inflation at 10% (core 9.2%), slowing to 6.9% in 2027 and 5% by end-2028
- Governor Andriy Pyshnyi announced the decision at a briefing
- The next NBU monetary policy meeting is scheduled for October 29, 2026
Why it matters
The second consecutive hike signals the NBU's tightening stance against an inflation print that has overshot its own July forecast. With consumer prices at 8.1% year-on-year and core inflation elevated, the central bank is acting to anchor expectations and protect the hryvnia. War-related factors, including Russian strikes on infrastructure and Middle East-driven fuel costs, are adding a supply-side component to inflation that monetary policy alone cannot fully offset. The rate move directly affects the cost of hryvnia assets, foreign-exchange stability, and the trajectory back toward the 5% target by end-2028.
What happened
On September 17, 2026, the National Bank of Ukraine's Board raised the key policy rate by 0.5 percentage points to 16%, up from 15.5%, in a decision announced by Governor Andriy Pyshnyi at a briefing. It is the second consecutive hike, following the July 30, 2026 increase to 15.5%.
The NBU cited sustained fundamental price pressure, secondary effects from supply shocks, and strengthening medium-term pro-inflationary risks as reasons for the move. It said the decision supports the attractiveness of hryvnia assets and the stability of the foreign exchange market, helps keep inflation expectations controlled, and is aimed at returning inflation to the 5% policy target.
Consumer inflation accelerated to 8.1% year-on-year in August 2026, slightly above the July forecast trajectory. Faster-than-expected fuel price increases amid escalation of the war in the Middle East were a primary driver, alongside faster rises in some administrative tariffs linked to consequences of Russian attacks on critical infrastructure. Core inflation remained elevated, fueled by rising business production costs in energy, logistics, and wages, and inflation expectations of economic agents were elevated.
The NBU forecasts end-2026 inflation at 10% (core 9.2%), slowing to 6.9% in 2027 and reaching the 5% target by the end of 2028. It expects inflation to begin slowing in 2027 partly thanks to current monetary tightening. The central bank said it stands ready to apply additional containment measures if risks intensify, and would consider easing if security deterioration leads to noticeable cooling of consumer demand and the labor market. The next monetary policy meeting is scheduled for October 29, 2026.
Where reporting differs
Spelling of the NBU Governor's surname varies between 'Pyshny' and 'Pyshnyi' across the supplied source set.
Background
The NBU's inflation target is 5% over the policy horizon. The rate stood at 15.5% from July 2026, when the NBU raised it on July 30, 2026 in response to a forecast of accelerating inflation. Earlier, in January 2022 the rate had been raised to 10%, then sharply to 25% in June 2022, where it remained for more than a year before being lowered to 22% on July 27, 2023, with phased reductions thereafter. Recent price dynamics have been shaped by fuel-price increases linked to Middle East escalation and faster rises in administrative tariffs tied to Russian strikes on Ukrainian critical infrastructure.