BAKU, Azerbaijan, June 10
Trend:
The Board of the Central Bank of Uzbekistan (CBU) decided to leave the key rate unchanged at 14 percent at a regular meeting held on June 10, Trend reports referring to a source in the CBU.
Analysis of inflation risks shows that in recent months the weight of factors that increase inflation has become relatively high and requires accelerating the implementation of systemic measures aimed at curbing inflationary processes, the source said.
First of all, this is due to ensuring that the growth rates of lending volumes match the growth of nominal GDP, maintaining a positive level of real interest rates in the money market (in the range of 2-3 percent).
An increase in the volume of fiscal stimulus in the coming months may lead to a certain inflationary pressure since a disproportionate change in the aggregate supply to the growth of consumption and investment demand is possible.
Besides, in the coming months, the factors of inflation in terms of its structure will be largely related to the dynamics of global prices for basic food products, the supply of fruits, and tendencies in the markets for automotive fuel and construction products.
At the same time, global prices of futures contracts for basic food products are expected to slightly decrease in October-November this year relative to current values.
Changing weather conditions (water scarcity in fields and pastures) observed since the beginning of this year may have an impact on feed prices and the re-planting of vegetables, which could put upward pressure on prices for meat products and vegetables.
In order to minimize the influence of the above factors, it's necessary to stimulate competition in consumer markets, expand markets and trade networks, increase the possibilities for growing and production of basic food products, and allocate the necessary land and water resources for planting food crops.
In the current situation and expected economic conditions, the current level of the Central Bank's base rate is sufficient to ensure optimal monetary conditions to achieve the inflation forecast for 2021.
The central bank will continue to scrutinize the nature of inflationary factors and risks, taking into account external and internal conditions.
The last time the bank kept the base rate at the level of 14 percent in January 2021.
The next meeting of the Board of the Central Bank to consider the base rate is scheduled for July 22, 2021.
