The National Bank raised the discount rate for the second time this fall — now to 16.5%

The National Bank of Ukraine (NBU) has raised the discount rate from 16% to 16.5% per annum. The new rate level will come into effect on October 30. NBU explains this decision by increasing inflationary pressure and worsening expectations for price growth.

This was reported by the NBU press service.

In September, annual inflation in Ukraine accelerated to 10%, while core inflation, which excludes some of the most volatile prices, was 8.8%. According to NBU, these trends persisted in October.

Inflation was most affected by rising fuel prices due to the war in the Middle East and increased Russian attacks on Ukraineʼs warehouses and logistics infrastructure. As a result, the population continued to expect price increases, while banksʼ and analystsʼ inflation forecasts worsened.

Raising the discount rate should make savings in hryvnia more attractive, support the stability of the foreign exchange market, and help contain price increases.

What is the discount rate?

The discount rate is one of the main indicators of the economy. It is the percentage at which NBU lends funds to banks and, accordingly, below which it is unprofitable for commercial banks to lend to customers. Thanks to the discount rate, NBU influences inflation (price growth).

Lowering the rate makes loans more affordable (because the interest on them becomes lower), due to which banks begin to issue more money, there is more of it in the economy, and when there is more money, inflation gains momentum. In this case, there is less money on deposits, and more on hand — accordingly, people spend more.

But higher inflation actually leads to a depreciation of the hryvnia, because with rising prices, you can buy fewer goods for the same amount.

And all this also works the other way around — when the rate rises, loans and deposits become more expensive, which encourages people to save more. As a result, there is less money in the economy and inflation slows down.

• At the beginning of the war, the National Bank decided not to change the discount rate, leaving it at 10%, but on June 2, 2022, NBU sharply increased the rate to 25%, which was one of the sharpest increases in history. Subsequently, NBU lowered the discount rate several times, until in June 2024 it was 13%, in December — 13.5%, in January 2025 — 14.5%, and in March — 15.5%.
• The last time the rate was raised was just last month — on September 17, to 16%.

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