Andriy Pyshnyy: National Bank of Ukraine press briefing - monetary policy decisions
Speech by Mr Andriy Pyshnyy, Governor of the National Bank of Ukraine, at a press briefing on monetary policy decisions, Kyiv, 18 June 2026.
Dear colleagues,
The Board of the National Bank of Ukraine has decided to keep its key policy rate at 15%. This decision ensures sufficiently tight current monetary conditions and takes into account lively demand for hryvnia saving instruments, as well as an easing of risks related to the war in the Middle East and insufficiency of external financing.
At the same time, given signs of increasing underlying price pressures, the NBU is ready to raise its key policy rate if necessary to keep inflation expectations in check and return inflation to a sustained downward trajectory toward its 5% target.
As expected, headline inflation slowed in May on the back of seasonal factors
In May, consumer inflation slowed as expected (to 8.2%) thanks to an increase in the supply of raw foods, and core inflation accelerated slightly (to 7.9%). Both indicators were higher than the NBU's forecast trajectory, primarily due to stronger second-round effects of the rapid growth in energy prices in previous months.
Inflation expectations were generally stable but remained elevated in some groups of respondents.
Inflation will stay close to the current level in the coming months, will accelerate at the end of the year, but will return to a decline in 2027
A sufficient supply of raw foods will limit the growth in inflation in the coming months. At the same time, prices will remain under pressure due to businesses' higher costs driven by increased energy prices, a weakening of the hryvnia in previous periods, and further growth in wages amid staff shortages.
The stabilization of energy prices, stronger harvests, and the impact of the NBU's monetary policy should help bring inflation back to the steady downward trajectory in 2027.
The expected inflows of international assistance will make it possible to finance the budget deficit and maintain a sufficient level of international reserves to ensure FX market sustainability
In January–May, external financial assistance was lower than anticipated, but its volumes are expected to be caught up going forward. In June, Ukraine may receive around USD 13 billion both as assistance from some countries and under current support programs, namely: ERA Loans and Ukraine Support Loan.
The progress made in the negotiations with the IMF, in particular achieving the Staff Level Agreement, is an important step toward securing further financing under the four-year Extended Fund Facility.
Going forward, the NBU expects sufficient inflows of external financing, which will be enough to both finance the budget deficit and increase international reserves, which is important for ensuring further sustainability of the FX market.
While the consequences of russian aggression remain the primary risk to inflation and economic growth, developments in the Middle East might also play a significant role
The war is continuing. Its consequences pose the greatest threat to price dynamics and economic activity. In recent months, there has been an increase in targeted russian attacks on production facilities, logistics, and energy infrastructure in Ukraine's industrial regions.
Consequently, there remains a risk of further damage to critical infrastructure and production facilities, which could constrain economic activity and, at the same time, intensify pressure on business costs.
There are other risks that are directly or indirectly related to the war. These risks are:
- the emergence of additional budgetary needs to support defense capabilities and reconstruction, with a corresponding pressure that expands domestic demand, including demand for imports
- elevated wage pressure due to a deepening labor shortage and negative migration trends.
The past few weeks have seen a decline in the risks related to Ukraine's further progress in negotiations with international partners on financing. However, as long as the war continues, risks of disruptions in the timing and/or changes in international financing remain.
Optimism regarding an end to the war in the Middle East has also increased, though the risks of it dragging on persist. A prolonged conflict in the region would lead to higher energy prices, which will negatively affect the Ukrainian economy and inflation trends while simultaneously bolstering russia's ability to continue its full-scale war.
At the same time, there remains a possibility that a number of positive scenarios could unfold. These are linked, specifically, to enhanced military and financial assistance from international partners and achieving significant progress toward a just and lasting peace for Ukraine.
Given the sufficiently tight current monetary conditions, as well as the easing of risks related to the war in the Middle East and Ukraine's progress in negotiations on external financing, the NBU is currently maintaining the key policy rate at 15%
The decline in oil prices, which is occurring against the backdrop of intensified diplomatic efforts to resolve the war in the Middle East, is a significant factor that will help reduce Ukraine's energy import costs and rein in inflation. Taking into account the expected increase in foreign aid inflows and the continued steady demand for hryvnia assets, the NBU currently sees no need to tighten its interest rate policy.
The current level of monetary conditions is sufficient to sustain demand for hryvnia savings instruments and to curb pressure on the FX market, which makes it possible to keep inflation under control. At the same time, keeping the key policy rate unchanged will contribute to the further development of lending, which is growing steadily at a rapid pace.
At the same time, given signs of increasing underlying price pressures, the NBU stands ready to raise its key policy rate if necessary to keep inflation expectations in check and return inflation to a sustained downward trajectory toward its 5% target. The next decision will be based on July macroeconomic forecast.
Thank you for your attention!
Glory to Ukraine!