Central Bank leaves key rate unchanged again

The Board of the Central Bank of Uzbekistan has decided to maintain the key interest rate at 14 percent per annum following its meeting on June 12. This was reported by the Central Bank's press service.

“The dynamics of economic activity and consumer demand in recent months, as well as the upward trend in core inflation, indicate that inflationary pressures persist in the economy. As a result, overall inflation remains above the projected trajectory despite a slight decrease in May. Under these circumstances, the key rate was kept unchanged to limit the secondary effects of rising energy prices on inflationary processes and to ensure a stable downward trend in overall inflation,” the statement said.

The overall inflation rate, which had been rising since the beginning of the year, declined to 8.7 percent in May. This decrease is attributed to the fading impact of last year’s energy tariff hikes. However, inflation expectations among both the general public and entrepreneurs remain elevated compared to actual inflation.

Core inflation continued to accelerate due to rising service costs, reaching 8.5 percent year-on-year in May. The emergence of secondary effects from the recent increase in energy prices—against the backdrop of strong aggregate demand—suggests that inflationary pressures may persist for a longer period.

Strong economic activity from January to May this year was identified as a key contributor to aggregate demand. This is reflected in increased revenues from trade and paid services, higher volumes of cross-border remittances, interbank transactions, and real estate sales.

“The continued rapid expansion of credit and growth in budget expenditures are also stimulating economic activity. These factors may further support aggregate demand and increase price pressures in the economy.

Amid global economic uncertainty and rising tensions in international trade, tight monetary conditions are expected to persist in many countries. Additionally, recent increases in global food prices are likely to create further upward pressure on domestic prices,” the Central Bank noted.

The Central Bank also reported that sustained high global prices for traditional export goods and the strengthening of exchange rates in partner countries are supporting the growth of export earnings and remittances. This, in turn, contributes to the stable formation of supply in the domestic foreign exchange market. Increased foreign investment inflows are also expected to help ease exchange rate-related inflationary pressures in the coming months.

Maintaining the current level of monetary tightening is seen as essential to ensuring moderate credit growth and continued high deposit growth rates. This will help balance aggregate demand and limit the impact of monetary factors on inflation.

“In light of the above factors, and to ensure medium-term price stability, the Central Bank Board has decided to leave the key rate unchanged at 14 percent.

The Central Bank reaffirmed its commitment to maintaining a sufficiently tight monetary policy to bring inflation down to the 5 percent target over the medium term,” the statement added.

Should inflationary pressures from aggregate demand and secondary effects increase beyond current expectations in the coming months, the Central Bank may consider further tightening monetary conditions.

The next meeting of the Central Bank Board to review the key rate is scheduled for July 24, 2025.

It is worth noting that at its previous meeting on April 24, the Board also chose to maintain the key rate at 14 percent per annum.