The National Bank of Ukraine (NBU) has kept interest rates on hold at 13%, it announced on Oct. 31.
The decision was in line with analysts’ predictions, and comes as Ukraine braces for next week’s U.S. presidential election, Bloomberg reported.
“Given that inflation has not yet peaked, and that pro-inflationary risks have even increased for the coming months, the NBU believes it appropriate to remain cautious,” the NBU said in a statement.
Policymakers refrained from cutting for the third consecutive month, part of an attempt to contain accelerating annual inflation, and uphold the stability of the domestic currency.
“In September, inflation accelerated to 8.6% year-on-year, and continued to rise in October,” the NBU said in its statement.
Higher than expected inflation was caused by a smaller than expected harvest, a weakening currency, and the rising cost of electricity and labor, the statement said.
“The war continues. Accordingly, the risks of a further decline in economic potential remain, in particular due to the loss of people, territories, and production facilities," it added.
“The speed of the economy's return to normal will depend on the nature and duration of the war.”
Ukraine's economy is heavily reliant on U.S. aid, and the next week's presidential election and the possibility of Donald Trump's return to the White House raises much uncertainty.
The NBU said it envisages maintaining rates at 13% until the summer of 2025.
The next monetary policy meeting of the NBU Board will be held on 12 December 2024.
Dominic Culverwell
