The National Bank has noted high inflation in Ukraine and begun to tighten monetary policy. In less than two months, it has raised the key policy rate for the second time. On September 18, the key policy rate rose from 15.5% to 16% per annum. It is worth recalling that the NBU’s previous hike—from 15% to 15.5%—took place on July 31. In principle, such decisions by the banking regulator should be interpreted by the market as a clear signal to raise yields on hryvnia deposits; however, there has been no widespread increase in deposit rates across Ukrainian banks, nor is one expected in the near future.
A Remedy for Inflation
Alongside the key policy rate hike, the NBU revised its inflation forecast for the end of 2026 upwards. It estimates that consumer inflation could reach 10% (up from a previous forecast of 9.4%), while core inflation is projected at 9.2%. The National Bank believes that raising the key policy rate should compel banks to increase rates on hryvnia deposits, thereby ensuring Ukrainians’ savings are protected against inflation. At the same time, a high key policy rate is intended to maintain the attractiveness of deposits and encourage the public to place funds in banks, effectively removing the excess hryvnia liquidity that fuels inflation from circulation. A further signal to the market was the NBU’s statement regarding its readiness to continue tightening interest rate policy. In response to the National Bank’s move toward a tighter interest rate policy, some Ukrainian banks—mostly smaller ones—began raising rates as early as August. However, large and medium-sized financial institutions did not react to the NBU’s policy tightening; in fact, some of the largest banks even lowered their rates. According to the “Minfin” portal, the average yield on three- and six-month deposits remained virtually unchanged in September, while rates on nine-month and one-year deposits rose by only 0.33%.
Interest Rate Tenders
Alongside the key policy rate, the maximum yield on NBU three-month certificates of deposit also increased—rising from 19% to 19.5% per annum (the key rate plus 3.5%). While these certificates remain a primary source of income for banks, not all of them can utilize this instrument now: as of August 7, the National Bank stopped automatically fulfilling bank applications and began holding bi-weekly interest rate tenders with a capped volume of certificates of deposit.
Experience from the initial tenders showed that demand for NBU certificates of deposit significantly exceeded the volumes offered at auction. Consequently, intense competition among banks for the opportunity to invest funds in these certificates immediately drove down their effective yield.
Following the first placement on August 7, the rate fell by 0.3% from the then-maximum of 19% to 18.71% per annum. Following the second auction on August 21, the returns for bankers who successfully won the tenders dropped further—by 0.6%—to 18.59% per annum. At this second auction, the NBU accepted only 39 of the 76 bids submitted by 17 banks, totaling UAH 40 billion. Unmet demand rose to UAH 12.1 billion, up from UAH 7.1 billion on August 7.
An even more unusual situation unfolded at the auction on September 18. After the key policy rate was raised to 16%, the yield ceiling for certificates of deposit officially rose to 19.5%. However, banks drove the price (yield) down even more aggressively in their bids to ensure they won the tender; consequently, the actual weighted average rate settled in the 18.59–18.65% per annum range. In effect, banks were placing funds at virtually the same yield as before the NBU rate hike, while the gap between that figure and the maximum possible rate had widened to nearly 1%.
The NBU intended for this shift in the placement of certificates of deposit to intensify competition among banks for depositors. However, some bankers believe the National Bank’s auctions have had the opposite effect. Since the actual yield on certificates of deposit at these auctions is declining, banks—particularly those without liquidity issues—currently lack sufficient economic incentive to broadly raise rates on their deposit products. However, in the coming months, they will still have to respond to the situation and raise rates. Since banks can no longer earn unlimited, passive income from three-month NBU certificates of deposit, they are forced to manage their liquidity more carefully. To meet NBU regulatory requirements and build portfolios for purchasing these three-month instruments, financial institutions continue to keep medium-term hryvnia deposits—particularly those with six- and nine-month terms—highly attractive.
Why banks are holding back
The main reasons why banks are not currently raising rates on hryvnia deposits across the board are their sufficient liquidity levels and the lack of any acute need for additional funds among most banks. According to preliminary National Bank statistics for August, the total portfolio of household funds in banks grew by 0.5% (or UAH 7.2 billion), reaching UAH 1.536 trillion.
At the same time, financial analysts estimate that the growth of household time deposits slowed to a 12-month low in August: an increase of UAH 1.6 billion, or just 0.3%, compared to July.
The share of household time deposits also showed a noticeable decline that same month, shifting instead toward current accounts (card and settlement accounts).
Domestic bankers are well aware of these worrying trends, yet the lending situation has prevented them from effectively competing for customer deposits by raising interest rates during the war. Banks have virtually nowhere to invest their funds. Business demand is plummeting, and banks themselves are unwilling to take the risk of lending to households. However, the situation has recently begun to improve somewhat.
**Loans to Boost Deposits**
By the end of the second quarter of 2026, the banking system had recorded growth in loan portfolios for both businesses and households. In July, the volume of loans issued to residents stood at UAH 1.388 trillion, while in August—according to preliminary NBU data—it reached UAH 1.44 trillion. It appears this trend will continue through the end of the year. Throughout 2026, conditions for consumer loans have been easing, driven in part by strong competition. However, the fiercest competition has emerged in the credit card segment. The reason is quite simple: a credit card allows a bank to build a long-term relationship with a customer, gradually accustoming them to living on borrowed funds.
Incidentally, recent NBU decisions could further encourage banks to ramp up their lending activities. Unmet demand for certificates of deposit following interest rate tenders leaves banks with additional free liquidity—funds they previously invested in NBU certificates without issue—compelling them to actively channel this capital into lending. The NBU believes this situation will allow the average real interest rate on consumer loans in the Ukrainian market to remain stable despite the hike in the key policy rate, while also significantly boosting lending activity.
**Autumn Outlook**
If the key policy rate remains near its current level, there will be no significant or rapid revision of deposit yields before the end of November. We can expect a gradual increase in the number of banks revising yields on hryvnia-denominated term deposits, with most active market players likely adopting updated rates or new terms for attracting funds.
Hryvnia deposit yields are currently influenced by a combination of external and internal factors. External factors naturally include the NBU’s current key policy rate and expectations regarding its future monetary policy. However, the inflation and exchange rate expectations of ordinary Ukrainians are equally important, as they largely determine the attractiveness of hryvnia deposits. The general state of the financial market also plays a role.
At the same time, each bank considers its own internal factors: current needs for additional funding, the structure and cost of its resource base, the maturity of attracted funds, lending plans, and the resources required to finance them. Each bank will decide whether to raise rates based on its need for additional funds.
Commenting on the NBU’s decision to tighten policy, bankers note that the market’s reaction will be gradual. Initially, rates on hryvnia deposits will be raised by banks that need to attract additional liquidity—primarily smaller financial institutions. Large and mid-sized players with substantial liquidity buffers will likely adopt a wait-and-see approach, with a clearer trend emerging only towards the end of autumn or even the end of the year.
