Central Bank of Uzbekistan leaves key rate unchanged
At its meeting on September 16, the Board of the Central Bank of Uzbekistan decided to keep the policy rate unchanged at 14% per annum, the regulator's press service reported.
Central Bank of Uzbekistan leaves key rate unchanged
"Despite the ongoing decline in inflation and the emergence of some signs of a more balanced economic dynamic, the persistence of certain pro-inflationary risks requires maintaining the current tight monetary conditions. At the same time, an increase in the share of goods and services whose prices are growing at rates above 5% per year indicates that price pressure of a persistent nature still remains in the economy," the statement says.
Inflation expectations of the population and business entities also continued to decline. However, inflation expectations are decreasing more slowly than headline inflation, which indicates that a certain influence of inflationary inertia remains in pricing processes.
According to the Central Bank's estimates, the positive dynamics of retail trade, services, and investments indicate active consumer and investment demand. At the same time, signs of stabilization in certain components of aggregate demand have begun to appear in recent months.
In particular, under the influence of current monetary conditions, the growth rate of lending to the economy is gradually returning to normal. Meanwhile, positive real interest rates support the population's propensity to save.
"The high level of prices in global commodity, food, and energy markets causes pressure on domestic inflation to persist through import prices, transport, and logistics costs in the medium term. The scale of secondary effects of external price shocks on domestic inflation will largely depend on the dynamics of domestic demand and the structural measures being taken," the press release says.
The ongoing liberalization of regulated prices may amplify secondary inflationary effects through production costs and service prices.
Maintaining the current tight monetary conditions is assessed as necessary to limit the transition of these risks into persistent inflationary processes, mitigate their possible secondary effects, and ensure a steady decline in inflation expectations.