Central bank leaves the key rate unchanged

The Central Bank has kept the key rate steady at 13.5 percent per annum. The decision was made today, September 12, by the Central Bank’s Board.

It was reported that high demand in the economy, along with rising prices for certain food products and energy resources, necessitates maintaining the stability of current monetary and credit conditions.

"High economic activity and stable income growth among the population are key factors driving aggregate demand.

To bring inflation down to forecast levels by the end of the year and achieve the medium-term target of 5 percent, the Central Bank's Board decided to leave the key rate unchanged at 13.5 percent," the Central Bank said in a statement.

Inflation remained stable over the past three months, standing at 10.5% annually in August. This year, a drop in fruit and vegetable prices contributed to a reduction in inflation, easing it by about 1 percent. However, core inflation, which had been decreasing since the beginning of the year, stopped falling year-on-year after June.

"The dynamics of the exchange rate and the stable pricing of food products have positively influenced inflationary expectations among the population and entrepreneurs. In July, expectations fell to 11-12%, but increased to 12-13% in August due to anticipated hikes in pensions, public sector wages, and rising fuel costs.

With the improvement in the foreign trade balance and a significant rise in remittance volumes, the current account deficit is also expected to shrink. This will help alleviate potential pressures on the exchange rate and maintain its current stability," the report said.

Looking ahead, the Central Bank will continue to pursue relatively tight monetary and credit policies to meet the 5 percent inflation target. Decisions will be based on the balance of supply and demand in the economy and the formation of inflationary factors.

The next meeting of the Central Bank's management to review the key rate is scheduled for October 24, 2024.