TASHKENT, Uzbekistan, June 12. The Central Bank of Uzbekistan has decided to maintain the key interest rate at 14 percent per annum, Trend reports.
The decision follows an analysis of current economic activity, consumer demand, and core inflation trends, which indicate sustained inflationary pressures in the economy. Despite a moderate slowdown in overall inflation in May, it continues to exceed the projected trajectory, primarily due to several internal factors. In this context, maintaining the key rate at its current level aims to neutralize the secondary effects of rising energy prices and establish a sustainable downward trend in inflation.
Since the beginning of the year, inflation has been rising; however, in May, it decreased to 8.7 percent year-on-year, largely due to the fading impact of last year’s energy tariff hikes. Nevertheless, inflation expectations among the population and businesses remain higher than the current inflation rate, amplifying the risk of persistent inflationary pressures.
Core inflation continued to rise, reaching 8.5 percent in May, mainly due to accelerating price increases in the services sector. This, combined with sustained high aggregate demand, points to the resilience of inflationary pressure, including secondary effects from the ongoing rise in energy prices.
High economic activity in January-May has been a key driver of domestic demand growth. This is reflected in increased trade revenues, growth in the services sector, higher remittances, and rising volumes in interbank operations and real estate transactions.
Additional economic stimulus comes from the continued growth in credit lending and expanding government spending. These factors could further intensify inflationary pressures in the future, fueling excess aggregate demand.
Externally, uncertainty in the global economy and tensions in international trade persist. Under these conditions, tight monetary policies in leading economies are likely to last longer than originally expected. Furthermore, recent increases in global prices for certain food products may have additional effects on domestic prices.
The domestic foreign exchange market is supported by high global prices for traditional exports and the strengthening of currencies in trade partner countries. This supports export revenues and remittance inflows, ensuring a stable currency supply in the domestic market and mitigating inflationary risks associated with exchange rate fluctuations.
By maintaining the current level of monetary policy tightness, the Central Bank aims to ensure moderate credit growth and the active expansion of the deposit base, thereby supporting balanced demand and reducing inflationary factors related to monetary conditions.
Given the combination of internal and external factors, as well as the goal of achieving price stability in the medium term, the Central Bank’s Board has decided to keep the key rate unchanged at 14 percent per annum.
The Central Bank will continue to pursue policies aimed at achieving the medium-term inflation target of 5 percent. If inflationary pressures from demand or secondary effects exceed forecasts, the regulator is prepared to adjust its monetary policy parameters.
The next meeting of the Board to discuss the key interest rate is scheduled for July 24, 2025.
