Policy Rate: The National Bank of Ukraine (NBU) is responsible for setting the policy rate, or the critical refinancing rate or discount rate. The policy rate is a crucial tool central banks use to influence economic conditions.
Inflation Rate: Inflation plays a significant role in determining interest rates. In Ukraine, inflation had been a concern in previous years, and the central bank aimed to keep it under control.
Economic conditions and external factors, including geopolitical tensions, also influenced interest rates in Ukraine. The country faced economic challenges and uncertainties due to factors such as the conflict in Eastern Ukraine and international developments. With the current conflict ongoing in Ukraine, it is interesting how it impacted the Interest rates by cutting monetary policies in September 2023 to 20%, easing from the summer to slow down disinflation. With improved prices and expectations and working with decelerating inflation much faster than expected, it turned out to be 8.6%—the summer mainly due to rich crops, the stable hryvnia, and imposed caps on utility services. The uncertainty around the end of the active phase of the war, the lasting destruction of critical infrastructures, the attacks on Ukrainian grain ports, import limitations, and higher global energy prices posed underlying risks.
Article:
https://tradingeconomics.com/ukraine/interest-rate
It is really interesting to see how Ukraine is functioning economically while being involved in a conflict with a country with as much influence as Russia. It is surprising that Ukraine has been able to control inflation as well as it has as well as being able to have a successful harvest.
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