Ukraine's central bank raised the main interest rate to 14.5% to curb inflation, challenging economic recovery amid war with Russia. Inflation hit 12% in December, driven by rising costs and power shortages.

Inflation in Ukraine accelerated to 12% in 2024, exceeding forecasts made by the country's National Bank, Ukraine's statistics service Derzhstat announced on Jan. 10. The Ukrainian economy has undergone harsh conditions with the onset of Russia's full-scale invasion of Ukraine in 2022.

Ukraine's National Bank (NBU) announced on Jan. 23 that it will raise the key policy rate from 13.5% to 14.5% per annum starting from Jan. 24, 2025.

The inflation forecast has also worsened, now predicted to reach 8.4%, up from the earlier estimate of 6.9%. "Considering security risks and the challenging labor market situation, the National Bank has lowered its real GDP growth forecast for 2025 to 3.

Alexandra Prokopenko is a Fellow at the Carnegie Russia Eurasia Center in Berlin. She worked at Russia’s central bank until early 2022.

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