The NBU Board left the policy rate unchanged at 15.0% at a meeting yesterday, contrary to the 50bp cut signaled in its forward guidance. The central bank justified the decision by an aggravation of pro-inflationary risks amid the unfolding conflict in the Middle East, as well as a sharp deterioration in household inflation expectations in February to 14% from 10%, likely reflecting strains in the domestic power sector. The NBU noted that headline inflation stood at 7.6% y-o-y in February, slightly above its forecast, while core CPI at 7.0% was fully in line. However, the Bank emphasized that the future inflation trajectory will likely exceed its current forecast due to spillovers from the Middle East conflict via higher global energy prices. The NBU estimates the direct impact of higher oil prices on its end-2026 headline inflation forecast (7.5%) at 0.45pp and indirect effects at roughly double that level (implying 1.5bp total impact). It also noted that a sustained oil price range of $80-100/bbl could add $1.5-3.0bn to imports. Regarding its policy outlook, the NBU stated it will refrain from monetary easing if pro-inflationary risks persist and stands ready to hike the key rate or deploy additional measures should risks intensify. The central bank reiterated that the war in Ukraine remains the dominant risk to the inflation outlook, while geopolitical uncertainty increased markedly last month, primarily due to the Middle East conflict. A prolonged war with Iran would amplify inflationary pressures and potentially strengthen Russia’s capacity to sustain its war against Ukraine. Other downside risks include disruptions or shortfalls in external financing, rising fiscal funding needs, and broader global conflict escalation. Upside factors include stronger military and financial support from partners and intensified international efforts to end Russia’s war. The NBU will publish minutes from the latest Monetary Policy Committee meeting on Mar. 30. The next rate meeting, including revised macro forecasts and updated rate guidance, is scheduled for Apr. 30.

The European Council published a statement following an EU leaders’ summit yesterday, at which Ukrainian President Volodymyr Zelensky spoke via video link. The statement, supported by 25 EU members except Hungary and Slovakia, welcomed the earlier approval of a EUR 90bn loan to Ukraine to cover the 2026-27 external funding gap and said the Council “looks forward to the first disbursement to Ukraine by the beginning of April.” It also called for “intensified outreach to third countries to help close the remaining gap of EUR 30bn in Ukraine’s finances.”

Ukraine’s merchandise trade deficit provisionally totaled $4.9bn in February, expanding from $3.4bn in January and $2.6bn in February 2025.

Ukraine’s iron ore exports fell by 39% m-o-m and 49% y-o-y in February, to 1.3 Mt, bringing 2M26 volumes to 3.3 Mt (-41% y-o-y). Steel exports declined by 18% m-o-m and 23% y-o-y in February, to 247 kt, and fell by 9.8% y-o-y in 2M26, to 548 kt.

According to provisional data from the Finance Ministry, the state budget’s general fund ran a deficit of UAH 78bn ($1.8bn) in February. The Ministry also published detailed budget data for January, which showed the state budget (including the special fund and grant financing counted toward revenues) running a cash surplus of UAH 18bn ($0.4bn), while local budgets registered a surplus of UAH 25bn ($0.6bn), bringing the consolidated cash surplus to UAH 43bn ($1.0bn).

Crude steel production in Ukraine inched up by 0.8% m-o-m but fell by -9.9% y-o-y to 515 kt in February, bringing 2M26 production to 1.0 Mt (-13% y-o-y). Metinvest’s Zaporizhstal JV produced 226 kt of crude steel in February (-3.8% m-o-m, -4.1% y-o-y) and 460 kt in 2M26 (-3.8% y-o-y), accounting for 44% of total monthly output.

The State Statistical Service (SSS) reported that construction output in Ukraine increased by 3.3% y-o-y in January, as infrastructure construction rose by 16% y-o-y while real estate construction declined by 6.5% y-o-y. On a related note, the SSS revised its construction data for 2023-2025, lowering 2025 growth by 0.7pp to 11.3% (though December’s reading was upgraded to 15.9% from 9.6%). At the same time, it raised the 2024 tally by 2.3pp to 17.8% from 15.5% and revised 2023 growth up by a sizable 6.8pp to 32% from 25%.

The Cabinet of Ministers cancelled its order that mandated state-owned oi and gas company Naftogaz, rail operator Ukrainian Railways and defense conglomerate Ukroboronprom to cover at least 50% of their electricity consumption through imports. In parallel, the government also lowered to 60% from 90% the threshold for mandatory power imports by commercial consumers required to secure uninterrupted power supply.

The Federal Supreme Court of Switzerland has upheld the decision of the arbitration tribunal in Zurich and rejected a request by Russia’s Gazprom to annul the June 16, 2025 arbitration award ordering Gazprom to pay Naftogaz more than $1.4bn for gas transit services, plus interest.

• The intensity of Russian attacks and territorial gains remains at yearly lows. • The fighting is concentrated in three sectors in the Donetsk and neighboring Zaporizhya regions, with activity along the rest of the 1,200 km front line comparatively low. • Ukraine’s interception of Russian missiles and drones has improved markedly, but sustaining this positive dynamic depends on continued interceptor supplies, which appear at risk.

Naftogaz announced that it has engaged financial and legal advisors to manage its debt portfolio, which includes, but is not limited to, its Eurobonds (EUR 695m due Jul. 19, 2026, and $584m due Nov. 8, 2028). No firm commitment has been made at this stage, and the company said it will provide updates when available.

Kyivstar reported strong 2025 results, with sales and EBITDA both increasing by 26% y-o-y to $1.2bn and $648m — close to the upper end of the company’s guidance in January. Both came in slightly above our forecasts, reflecting stronger mobile ARPU growth and a higher-than-expected revenue jump at Uklon, Kyivstar’s ride-hailing business.

Ukraine’s real GDP grew by 1.8% y-o-y in 2025, according to provisional official data, slowing from 3.2% in 2024 and 5.5% in 2023. The statistical office also slightly revised quarterly data, reporting real GDP growth of 0.8% y-o-y in 1Q25 (revised by -0.1pp), 0.9% in 2Q25 (+0.2pp), 2.4% in 3Q25 (+0.3pp) and 2.8% in 4Q25 (-0.2pp). The State Statistics Service reported a 2025 GDP deflator of 14.5% y-o-y (vs. 12.0% in 2024) and nominal GDP at UAH 8,931bn, or $214bn.

The Ukrainian parliament’s economic development committee recommended that the government not increase freight tariffs for Ukrainian Railways in 2026.

Nasdaq-listed Kyivstar, Ukraine’s largest mobile network operator and leading digital player, published its 2025 financial results, reporting revenues of $1,157m (+26% y-o-y), EBITDA of $648m (+26%) and net income of $286m (+1.1%). The EBITDA margin remained flat y-o-y at 56.0%. The results imply 4Q25 EBITDA of $172m (+0.6% q-o-q and +22% y-o-y), with the EBITDA margin down 4.0pp q-o-q to 53.6%.

Naftogaz CEO Sergiy Koretsky said the company’s oil pipeline infrastructure in southern Ukraine came under attack for two consecutive days. The company stated that the main objective of the strikes was to prevent alternative supplies of non-Russian oil to Europe.