National Bank of Ukraine has increased its interest rate to 25%

National Bank of Ukraine (NBU). Image: VoxUkraine

The main interest rate of the National Bank of Ukraine (NBU) has been raised from 10% to 25%.

"The Board of the National Bank of Ukraine decided to increase the rate to 25%," NBU Governor Kyrylo Shevchenko said at a press conference, according to NBU announcement.

As explained previously, the purpose of such an increase is to protect citizens' hryvnia incomes and savings, increase the attractiveness of hryvnia assets, reduce foreign exchange market pressure, and, as a result, strengthen the National Bank's ability to maintain exchange rate stability and control inflation during the war.

According to Shevchenko, the NBU decided to refrain from making rate decisions at the start of Russia's full-scale aggression because the changes had little chance of stabilizing expectations and stimulating the maintenance of hryvnia assets.

At the same time, the NBU governor stated that the gradual adaptation of Ukraine's economy and the transition from psychological shock to economic logic of decision-making by businesses and individuals necessitate a shift in monetary policy approaches.

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In his opinion, the threats of dollarization of the economy and the resulting loss of resources by the financial system have increased now that there is no proper reward for maintaining hryvnia assets.

The National Bank of Ukraine raised the key interest rate to 10% in January 2022, as previously reported. The rate has remained unchanged since the beginning of military aggression.