Ukraine Decides to Raise Rates for the First Time Since the War

Within the scope of the fight against inflation, the Central Bank of Ukraine increased the policy rate for the first time in 4 months from 10 percent to 25 percent.

For the first time since the war, the Central Bank of Ukraine increased the policy rate to 25 percent in order to fight the inflation crisis and defend the currency at the meeting held today. It was recorded as the highest level applied since September 2015. "Developments in inflation require the bank to return to an active interest rate policy to prevent further deterioration in expectations and dollarization," President Kyrylo Shevchenko said in the policy text. While Russia's occupation on February 24 caused a collapse in the Ukrainian economy, this triggered an increase in inflation and also put pressure on the reserves of the Central Bank. Inflation, which was 16.4 percent in April, rose to 17 percent in May. Announcing its last interest rate decision in January, the Central Bank of Ukraine increased the policy rate by 100 basis points to 10 percent. In May, there were news that the bank would return to normal in monetary policy decisions as of June.