Tashkent, Uzbekistan (UzDaily.com) —  On 12 September 2024, the Board of the Central Bank of Uzbekistan decided to keep the key interest rate at 13.5% per annum.

According to the regulator, this decision is driven by high demand in the economy and rising prices for food products and energy resources, necessitating the maintenance of current stringent monetary policy conditions.

Economic activity and income growth continue to stimulate aggregate demand. To achieve the inflation forecast for the end of the year and the long-term target of 5%, the decision was made to maintain the rate at 13.5%, reports the Central Bank.

In recent months, inflation has remained stable at 10.5%. The decrease in prices for fruits and vegetables has contributed to the slowing of inflation, but core inflation has not decreased since June. The growth in industrial production, construction, and services from January to July indicates a narrowing gap between demand and supply, emphasized the regulator.

The Central Bank reports that in July, the reduction of the key rate and increased liquidity in the banking system led to a decrease in interest rates and yields on government securities. Investment and consumer activity are expected to continue supporting demand, while budget expenditures and direct investments will contribute to further growth.

In September-October, the increase in pensions and salaries in the public sector is expected to boost consumer demand. Inflation expectations, which decreased in July, rose in August to 12-13% against the backdrop of anticipated salary increases and fuel price hikes, according to the Central Bank’s statement.

The regulator noted that the improvement in the foreign trade balance and increase in remittances are likely to reduce the current account deficit, easing pressure on the exchange rate and ensuring stability.

The Central Bank will continue to maintain a strict monetary policy to achieve the target inflation level of 5%.

The next meeting on key rates is scheduled for 24 October 2024.