By Olena Harmash KYIV, Jan 29 (Reuters) - Ukraine's central bank cut its key interest rate to 15% on Thursday, from 15.5%, due to slowing inflation and more clarity over international financial aid
Ukraine Central Bank Lowers Key Interest Rate to 15% Amid Inflation Drop
Impact of Interest Rate Cut on Ukraine's Economy
By Olena Harmash
Inflation Trends and Economic Outlook
KYIV, Jan 29 (Reuters) - Ukraine's central bank cut its key interest rate to 15% on Thursday, from 15.5%, due to slowing inflation and more clarity over international financial aid this year, it said in a statement.
Foreign Aid and Currency Stability
Consumer price inflation slowed to 8% year-on-year in December, and the central bank expects it to continue decreasing in January.
Challenges in the Energy Sector
Governor Andriy Pyshnyi said the central bank decided to start the cycle of interest rate policy easing, taking into account a steady decline in inflationary pressures and lower risks related to external financing.
The interest rate was held steady throughout much of 2025.
"This decision will facilitate the economy's ongoing adaptation to wartime challenges – specifically by supporting lending, which has grown at a rate of over 30% year-on-year in recent years," Pyshnyi told an online media briefing.
However, the central bank's statement said that inflation expectations remained high due to destruction in the energy sector after intensified Russian bombardments of Ukraine's power infrastructure. The central bank sees inflation ending this year only marginally lower at about 7.5%.
GDP SEEN RISING BY 1.8% IN 2026
Central bank officials said they expect Ukraine's economic growth to continue in 2026 but at a modest pace due to the energy deficit. The central bank expects gross domestic product to increase by 1.8% this year, the same pace as last year.
"The difficult situation in the energy sector will continue to restrain business activity for a long time," Pyshnyi said.
Officials also said that higher imports of energy equipment and fuel were driving demand for hard currency.
The central bank said it was committed to maintaining stability on the foreign exchange market. Its reserves stood at a record $57.3 billion and the central bank expects the reserves to grow to $65 billion by the end of this year.
The European Union plans to provide Ukraine with 90 billion euros ($105.46 billion) of support over this year and next. Ukraine is also in talks with the International Monetary Fund on a new $8.1 billion lending program.
(Reporting by Olena Harmash; Editing by Daniel Flynn and William Maclean)
