National Bank of Canada on the Economic Outlook

Seven out of ten members of Ukraine's National Bank Monetary Policy Committee anticipate key rate cuts in 2027, according to their expectations shared in a September 16 meeting. The National Bank (NBU) plans to maintain the interest rate unchanged in the coming months, with a possible shift towards easing monetary conditions if inflationary risks diminish, as quoted in the NBU's statement.

However, two panelists remain cautious, fearing that persistent price pressures and elevated medium-term risks could necessitate an additional rate hike following their October macroeconomic forecast update. Despite this, they also believe a rate cut might occur by the end of 2026, depending on disinflationary factors stemming from weaker economic activity.

Notably, only one committee member advocates for quicker rate cuts, citing potential disinflationary effects on economic activity. The committee members agreed on the need for the NBU to adapt flexibly to evolving risk perceptions on price dynamics and inflation expectations. If economic security concerns escalate, the NBU might need to tighten monetary policy again, while a downturn in consumer demand or labor market conditions could prompt further easing of monetary conditions, as per the NBU's statement.