The Central Bank's board decided to maintain the key interest rate at 14 percent per annum



On December 14, the Central Bank's board decided to maintain the key interest rate at 14 percent per annum.

Reports indicate a slight slowdown in inflationary trends within the economy, yet uncertainty persists regarding the duration of this deceleration.

Given the high aggregate demand, the goal of lowering inflation to the target of 5 percent by 2025 necessitates the continuation of relatively stringent monetary and credit conditions.

Inflation rates decreased to 8.8 percent annually in October-November. This decline is attributed to several factors, including the impact of a high base from the previous year, a decrease in the rising influence of import prices, and the incomplete manifestation of increased energy tariffs for legal entities, all amidst continuing strict monetary and credit conditions.

Forecasts indicate an expected inflation rate of 8-9 percent in 2024 under basic forecast conditions. However, external risks, such as non-market restrictions, trade fragmentation, and potential effects of adjustments in regulated prices, are likely to manifest in the coming quarters, leading to inflationary pressures.

Although core inflation has displayed a slowing trend since the beginning of the year and reached 9 percent annually in November, persistent pressure on certain goods is evident, making achieving a sustained decline in inflation a time-consuming process.

Both the public and entrepreneurs maintain inflationary expectations around 13-14 percent, higher than current inflation indicators.

The slow improvement in global inflationary processes and volatile expectations in the world economy and international raw material markets increase the likelihood of firm external financial conditions in the near future, impacting financing conditions reliant on external resources.

Economic activity is primarily supported by robust aggregate consumer demand and increasing private investment. Government spending and rising retail lending further bolster consumer demand. The services sector remains the primary driver of supply-side economic growth, contributing to approximately half of GDP growth. Sustaining positive wage growth and real income will continue supporting consumption activity.

Considering the aforementioned factors, risks associated with achieving a stable decrease in inflation persist, leading the Central Bank management to opt for a continued relatively tight monetary policy to reach the inflation target.

Maintaining the key rate unchanged amid decreasing inflation aims to moderate real interest rates in the money market, sustaining the ongoing dynamics of accumulation activity while balancing lending rates and enhancing the utilization of domestic financial resources amidst rising external financing costs.

Given high real interest rates on deposits in the national currency, a continued high growth rate in bank deposits is anticipated.

Looking ahead, ensuring long-term price stability will become increasingly crucial, linked to reductions in the budget deficit and expanded application of market principles within the economy.

The Central Bank commits to creating monetary and credit conditions focused on curbing inflation, reinforcing macroprudential measures, and basing key rate decisions on inflation forecasts and expectations alongside updated future information.

The next meeting of the Central Bank Board to review the key rate is scheduled for January 25, 2024.


Markaziy bank asosiy stavka

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