The National Bank of Ukraine raised the key interest rate to 16%: bankers assess the impact on deposits, loans, and the exchange rate
The National Bank of Ukraine (NBU) raised the key interest rate by 0,5 percentage points to 16% per annum, in an effort to curb inflationary risks exacerbated by Russian attacks on energy, production, and logistics. This was stated by Serhiy Mamedyov, Vice-President of the Association of Ukrainian Banks; in August, annual inflation stood at 8,1%. Banks expect deposit rates to rise, while loan rates will also increase; the NBU does not anticipate an automatic strengthening of the hryvnia.
The National Bank of Ukraine has raised the key interest rate from 15,5% to 16% per annum. This was announced by Serhiy Mamedyov, Vice-President of the Association of Ukrainian Banks. According to him, the increase of 0,5 percentage points is aimed at curbing inflationary risks, which have intensified against the backdrop of Russian attacks on energy, production, and logistics.
The banker noted that the interest rate is not capable of stopping missile attacks or making fuel cheaper, but it can help to curb the spread of price pressure across the entire economy. Therefore, the decision by the National Bank has, to some extent, a preventive nature: its goal is not to wait until inflation accelerates, but to limit the risks of its further increase now.
In August, the annual inflation rate was 8,1%, but in the autumn, businesses faced additional expenses for electricity, fuel, transportation, and maintaining continuous operations. Some of these expenses could gradually be passed on to the final cost of goods and services.
According to Mamedyov, the increase in the key rate will lead to higher interest rates on deposits, so depositors will have certainty about the profitability of their money in the banking system by the end of the year. At the same time, loans are likely to become more expensive.
For businesses, state programs will be available, including the "Accessible Loans 5-7-9%" program, which allows businesses to receive compensation from the state for the purchase of generators and the installation of solar power plants, as well as for investments in construction and implementation of projects in a zone of military risk. Мамедов noted that in the current conditions, businesses will not be able to massively service loans at excessively high interest rates, as businesses already face significant additional costs related to the war: for energy independence, logistics, security, and the restoration of damaged facilities.
According to the banker, the exchange rate may remain stable if the demand for foreign currency decreases. It is not expected that the hryvnia will automatically strengthen as a result of raising the key interest rate to 16%.