The National Bank of Ukraine (NBU) reversed its easing policy and hiked rates for the first time since 2018 by 50bp to 6.5% at its monetary policy meeting on March 4.
The NBU has been slashing rates in the last two years as it has been highly successful in taming inflation, which fell to a post-Soviet low of 1.7% in May 2020. However, more recently inflation started climbing again on the back of rising food prices and reached 6.1% this January.
With inflationary pressures still present the regulator decided to act to head off further appreciation as other central banks in the region have been forced to do for the same reasons. The NBU has an inflation target of 5%, plus/minus 1pp.