Ukraine's central bank raised its key rate to 16.5% on 29 October, sees 12.5% inflation
Serguey Asael Shinder2 min readThe National Bank of Ukraine raised its key policy rate to 16.5% on 29 October, citing a significant increase in price pressures and a deterioration in inflation expectations. The text of Governor Andriy Pyshnyy's press briefing from that day was published by the Bank for International Settlements on 2 November; the decision itself is a week old.
According to the briefing, headline inflation accelerated to 10.0% year on year in September and core inflation to 8.8%, noticeably above the NBU's previous forecast, and the trend continued in October by the bank's estimates. The drivers were direct and second-round effects of the surge in fuel prices caused by the war in the Middle East, and intensified Russian attacks on warehousing and logistics. Household expectations remained high and volatile; those of banks and analysts worsened significantly.
The NBU raised its 2026 inflation forecast to 12.5% and estimates that the aerial attacks alone add around 0.7 percentage points. It expects inflation to slow to 7.3% in 2027 as fuel effects wane and to return to the 5% target in 2028. Real GDP fell an estimated 0.5% year on year in the third quarter, hit by the sea-port blockade and attacks on production and logistics, with metallurgy and ore mining worst affected; the 2026 forecast was cut to minus 0.4%, of which the attacks account for 1.9 points. Growth of 0.4% is projected for 2027, assuming logistics improve in mid-2027, and 2.2% for 2028.
International assistance in the third quarter was smaller than expected because reforms were delayed, but parliament passed laws in October to unblock EU and IMF financing. The NBU assumes about 50 billion dollars of direct budget support in 2026 and more than 32 billion under the defence component of the Ukraine Support Loan.
What it means
The NBU is tightening into a recession because the hryvnia's stability is the anchor it can still control. The forecast hinges on aid arriving on time, which the bank itself names as the condition.