TASHKENT, Uzbekistan, September 11. The Board of the Central Bank of Uzbekistan has chosen to keep the policy rate steady at 14 percent per annum, not rocking the boat this time around, Trend reports.
This decision reflects the persistence of inflationary pressures stemming from strong economic activity and consumer demand in the second quarter of the year. Simultaneously, inflation started to take a breather from August as the effects of last year’s high watermark slowly began to wane. In order to support the slowdown of inflationary processes and maintain the downward trajectory of core inflation, the regulator opted to leave the rate unchanged.
In August, headline inflation declined slightly compared to July, standing at 8.8 percent year-on-year. Core inflation also moderated, reaching 7.6 percent, supported by slower growth in food and non-food prices. However, sustained high aggregate demand, together with secondary effects of higher energy prices, continued to push services inflation upward.
Recent months have seen a gradual decline in inflation expectations among households and businesses, influenced by seasonal factors and the stabilization of the exchange rate. Nevertheless, these expectations still remain above the current level of headline inflation.
The economy hit the ground running in the first half of 2025, clocking in a robust 7.2 percent growth. Alongside rapid expansion in services, notable increases were observed in industry, construction, and agriculture. Key drivers of aggregate demand include robust remittance inflows, faster lending activity, rising budget expenditures, and high levels of investment.
Across the globe, inflation is taking its sweet time to cool off, thanks to persistent trade restrictions and a shifting landscape in international economic relations. In addition, rising world food prices and inflation in major trading partner countries above their target levels create risks of higher imported inflation for Uzbekistan. Under these circumstances, the Central Bank projects annual inflation to stand at around 8.7 percent by the end of 2025.
Maintaining relatively tight monetary conditions, the Central Bank emphasized, will help preserve the attractiveness of savings, moderate lending growth, ensure balanced pricing in the money market, and limit the monetary factors feeding inflation. At the same time, policymakers acknowledge that a steady downward trajectory in headline inflation will take time to materialize. Should price pressures rise above estimates in the following months, the level of monetary tightening may be adjusted correspondingly.
