NBU Raises Key Interest Rate to 16.5% to Bolster Hryvnia Savings and Stabilize Currency Market

National Bank of Ukraine Increases Key Rate

According to НБУ: During a press briefing on October 29, the National Bank of Ukraine (NBU) announced an increase of its key interest rate to 16.5%. This move aims to support savings in Ukrainian hryvnia, enhance the resilience of the foreign exchange market, and curb inflation. The announcement was made by NBU Governor Andriy Pyshnyi along with his deputies Volodymyr Lepushynskyi and Yurii Heletii. This adjustment follows earlier hikes in July and September, when the key rate was raised from 15% to 16%.

Current Trends in the Currency Market

October saw a rise in net demand for foreign currency, reaching $230 million daily compared to $172 million per day during the first two decades of the month. At the beginning of October, Ukraine’s international reserves stood above $47.1 billion, indicating a relatively stable financial position.

The NBU continues to maintain tight control over the currency market. As Governor Pyshnyi emphasized,

“Sustaining the stability of the foreign exchange market remains a core mission of the NBU and is crucial to achieving our main objective – maintaining price stability.”

Additionally, some smaller banks are offering deposit rates exceeding 17%, while the average interest rate on hryvnia deposits rose to 14% in October.

Credit growth also reflects positive momentum: in September, lending to businesses and individuals increased by over 30% year-on-year. At the end of October, the NBU introduced its fourth regulatory easing package to encourage lending in priority economic sectors. These initiatives demonstrate the central bank’s commitment to fostering economic development and preserving financial stability in Ukraine.

The decision to raise the key interest rate signals the NBU’s proactive stance against inflationary pressures and its effort to strengthen the national currency amid rising foreign currency demand. While higher rates may lead to increased borrowing costs for consumers and businesses, the ongoing credit expansion suggests the market is adapting well. This balance supports the potential for sustainable economic growth in the long run.