Blashchuk-Devyatkina Nataliia, Candidate of Economic Sciences, Associate Professor, Associate Professor of the Department of Financial Management, Ivan Franko National University of Lviv, Lviv , Ukraine

ORCID ID: 0000-0003-1860-3929
e-mail: nataliya.blashchuk-devyatkina@lnu.edu.ua

Semianyk Viktoria, Bachelor student, Ivan Franko National University of Lviv, Lviv, Ukraine

ORCID ID: 0009-0009-9968-8506
e-mail: viktoriia.semianyk@lnu.edu.ua

Impact of NBU Monetary Policy on Inflation Level and Economic Growth

Abstract. Introduction. The monetary policy of the National Bank of Ukraine (NBU) plays a crucial role in ensuring macroeconomic stability, regulating the level of inflation, and stimulating economic growth. In light of ongoing crises, particularly the ongoing impact of the pandemic, war and economic shocks, it is important to analyse the effectiveness of the NBU’s monetary instruments in order to develop optimal economic development strategies.

Purpose. This article aims to analyse the impact of the National Bank of Ukraine’s monetary policy on inflation and economic growth between 2020 and 2025, evaluate the effectiveness of its instruments and identify areas for improvement to ensure macroeconomic stability.

Results. This research is relevant due to the need to adapt NBU’s monetary policy to economic instability, global crises, and the consequences of military actions, which affect inflation levels, exchange rate dynamics, and the overall macroeconomic situation in the country.
The article analyzes changes in the NBU’s key interest rate, money supply dynamics (M3 aggregate), exchange rate fluctuations and international reserves, as well as their interaction with inflation and GDP.
The study employs economic and statistical analysis, comparative analysis, economic modelling and a systematic approach to assess the impact of monetary policy on macroeconomic indicators.
It examines the dynamics of key macroeconomic indicators, including:
The NBU’s key interest rate (its changes from 2020 to 2025), which directly influences lending activity and money valuation.
Inflation levels, analyzing consumer price changes and their correlation with money supply and the key interest rate.
The money supply (M3 aggregate) is assessed to determine how liquidity fluctuations affect inflationary processes and economic growth.
The Ukrainian hryvnia exchange rate against the US dollar was analysed to identify its relationship with inflation, international reserves and NBU interventions.
Ukraine’s international reserves, analyzing how currency interventions and external financial support impact the stability of the hryvnia and price levels.
Real and nominal GDP are evaluated to assess economic growth and the effect of monetary policy changes on business activity.
The results indicate that the tight monetary policy of 2022, which involved raising the key interest rate to 25%, effectively curbed inflation, albeit at the cost of reduced bank lending and slower economic growth. Between 2023 and 2024, easing monetary policy (by lowering the key rate to 13–14%) stimulated economic activity, but also reignited inflationary pressures. A strong correlation was identified between the key interest rate, the money supply and inflation. The rapid increase in the money supply in 2023–2024, in the absence of adequate monetary control, led to rising prices. Analysis of international reserves showed that their decline in 2022 (to $22.8 billion) weakened the hryvnia, whereas growth in reserves in 2023–2024 helped stabilise the exchange rate.

Conclusions. The findings highlight the need to balance inflation control and economic growth support to ensure macroeconomic stability. Effective exchange rate regulation, improved forecasting models and greater flexibility in monetary policy are essential for optimising the NBU’s monetary strategy.
Future research prospects include developing optimal mechanisms for coordinating monetary and fiscal policies, improving exchange rate stabilization strategies, and analyzing the impact of international financial flows on Ukraine’s macroeconomic stability.

Keywords: monetary policy; inflation; economic growth; discount rate; exchange rate; international reserves; gross domestic product; money supply.

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