Central bank lowers the key rate

Taking into account the expected dynamics of inflation and the reduction of inflationary risks, the management of the Central Bank decided to lower the key rate by 0.5 percentage points, setting it at an annual level of 13.5%. This was reported by the press service of the Central Bank.

In June, general inflation was recorded at an annual rate of 10.6 percent, with a significant decrease observed in the stable components of inflation and the prices of fruits and vegetables. Price dynamics in foreign markets continue to exert a dampening effect on import inflation.

"Furthermore, the decrease in food inflation and the stability of the exchange rate had a positive effect on the inflationary expectations of the population, leading to a significant decrease in June. This will create conditions for a decrease in inflationary pressures due to expectations," the report stated.

The downward trend in core inflation continued, with a rate of 5.9% in June, marking a decrease of 2.6% since the beginning of the year. According to the Central Bank, this is due to the secondary effect of the change in energy tariffs being lower than expected, indicating the continuation of the downward trend in inflation in the future.

"The central bank will continue to implement a relatively strict monetary policy aimed at achieving the 5% inflation target. Future decisions on the key rate will be based on inflation dynamics and forecasts, inflationary expectations, and macroeconomic data," the report said.

The next meeting of the Central Bank board to review the key rate is scheduled for September 12, 2024.

The base rate serves as a starting point for setting interest rates for loans and deposits from state and commercial banks. Banks determine loan and deposit interest rates based on the main rate set by the Central Bank.

In Uzbekistan, the main rate has remained unchanged since March 2023 at 14 percent. Based on the Central Bank's decision to lower the key rate, interest rates on loans provided by banks may decrease in the near future.

We remind you that it was previously reported that the average interest rate on loans in Uzbek banks has increased.