Ukraine NBU Surprises Consensus and Hikes 50bp

Economics Research 30 July 2026 | 9:53PM BST

Ukraine: NBU Surprises Consensus and Hikes 50bp; Guides for Further Tightening

Bottom Line: The NBU increased its policy rate by 50bp to +15.50%, in line with our Andrew Matheny | view but contrary to consensus’ near-unanimous expectations of a hold (we were the Goldman Sachs International only dissenting forecast). The Bank noted that although headline inflation has Johan Allen declined, core has continued to accelerate, exceeding the NBU’s April forecast | trajectory. The guidance provided in the accompanying press release was Goldman Sachs International

unambiguously hawkish, envisaging the possibility of a further hike at the next MPC. Accordingly, we changed our forecast and now expect the Bank to increase its key policy rate by another 50bp at the meeting in September.

n Policy: o Key Policy Rate: +15.50%, up from +15.00% o Overnight Certificate of Deposit (CD) Rate: +15.50%, up from +15.00% o Refinancing Loan Rate: +19.50%, up from +19.00% o Three-Month CD Deposit Rate: +19.00%, up from +18.50% n Forecasts: o CPI (end of year): § 2026: +10.0%yoy (previous (April): +9.4%yoy) § 2027: +6.9%yoy (previous: +6.5%yoy) § 2028: +5.0%yoy (unchanged) o Real GDP growth (%): § 2026: +1.8%yoy (previous (April): +1.3%yoy) § 2027: +2.8%yoy (unchanged) § 2028: +3.0%yoy (previous: +3.7%yoy) o Key policy rate (quarterly average): § 2026 Q3: +15.4% (previous (April): +15.0%) § 2026 Q4: +16.0% (previous: +15.0%) § 2027 Q1: +16.0% (previous: +15.0%) § 2027 Q2: +15.3% (previous: +14.3%) § 2027 Q3: +14.6% (previous: +13.6%)

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1. The Board of the NBU increased its key policy rate by 50bp to +15.50%, in line with our forecast but a hawkish surprise to consensus expectations for a hold. The Bank cited the “persistent heightening of underlying inflationary pressures and a more significant acceleration of headline inflation by the end of the year” as the primary rationale, as well as retaining the “attractiveness of Hryvnia assets”, maintaining FX market sustainability, and keeping inflation expectations anchored. While headline inflation slowed to 7.2%yoy in June, core inflation continued to accelerate to 8.1%yoy, exceeding the NBU’s April forecast of +7.2%yoy. 2. The NBU revised its inflation and growth outlook higher. It now expects headline inflation to accelerate to +10.0%yoy by end-2026 (driven by expanded fiscal stimulus, rising labour costs due to market tightness, and FX and fuel pass-through), before declining to +6.9%yoy in 2027 and reaching the +5%yoy target only by end-2028. Growth was revised up: the 2026 forecast was lifted to 1.8%, with growth accelerating to approximately 3% in 2027-28. However, Q2 GDP was revised down from +1.7%yoy to +0.8%yoy. 3. Notably, the Bank flagged that the Ukraine Support Loan (USL) defense financing is channeled into the localisation of weapons production in Ukraine, a factor that “will fundamentally change the paradigm of both economic growth and the functioning of the country’s FX market”. Firstly, it will boost the Ukrainian economy through higher domestic production. On the FX side, the NBU expects that this will increase the demand for imported weaponry components. As a result of a “widening of structural demand for foreign exchange”, the NBU expects to expand its intermediary role to preserve the sustainability of the FX market. At the same time, the inflow of part of the foreign exchange into international reserves will increase reserves to nearly USD 70 billion by year-end. 4. On risks, it continues to emphasise the war against Russia as the key threat, while highlighting renewed Middle East risks as oil prices have started rising again. 5. We would characterise the guidance as unambiguously hawkish, with the NBU explicitly referring to further tightening. The Bank stated it “stands ready to tighten its interest rate policy further” and noted its current forecast “envisages the possibility of a further increase in the key policy rate and a return to a monetary…