TASHKENT, Uzbekistan, January 25. The level of the main rate in Uzbekistan remained unchanged (14 percent per annum), taking into account the expectations formed under the influence of high demand dynamics in the economy, Trend reports.
According to the Uzbek Central Bank's forecasts, inflation is expected to amount to 8–9 percent by the end of the year.
Formed monetary conditions are aimed at ensuring the trajectory of a steady decline in inflation to the level of 5 percent of the target.
Overall inflation remained at 8.8 percent in recent months. Despite the decline in inflation in the group of consumer basket goods, inflation in services slightly accelerated in the last quarter. This, in turn, shows that there is a probability of strengthening upward pressure from the demand side on inflation.
In general, the emergence and persistence of inflationary processes in the economy are explained by the inability of some components of supply to fully adapt to the conditions of high demand.
In addition, according to the latest surveys, perceived inflation and inflation expectations remain at a high level.
An important role in the acceleration of economic growth to 6 percent in 2023 was played by high growth rates of fixed capital investment. Positive credit to the economy, fiscal stimulus, and remittances also supported the momentum of economic growth.
Global inflation is expected to continue to slow down this year, influenced by tight financial conditions, balancing labor markets, and declining commodity price dynamics in the global economy.
Taking into account current and expected economic trends in the trading partner countries, it is expected that there will be no high pressure on the real effective exchange rate of the soum in the coming months.
With the reduction of structural liquidity surpluses in the banking system, there will be an intensification of operations in the money market. Necessary conditions will also be created this year for the formation of short-term interest rates within the boundaries of the interest rate corridor through the active application of monetary operations.
Under the conditions of high positive real interest rates on deposits in the national currency, the dynamics of growth in the volume of bank deposits are expected to continue.
According to the updated forecasts for the main scenario, general inflation is expected to be at a level of 8–9 percent, and core inflation is expected to be about 7-8 percent in 2024.
The scenario of macroeconomic development in the current year will depend on external economic factors and internal factors of macroeconomic stability—the pace of structural reforms, budget discipline, and effectiveness of monetary policy.
At the same time, measures are being taken to mitigate potential one-off effects on domestic prices in the coming months, from expected changes in some regulated prices to recent changes in excise tax and value-added tax.
The main external risks will be associated with increased global fragmentation and the longer-term persistence of elevated global inflationary processes.
Real GDP growth is projected at 5.5–6 percent in 2024. The main drivers of economic growth are, on the one hand, consumer demand and, on the other hand, an increase in foreign and domestic direct investment under the influence of structural reforms.
The Central Bank will make future decisions on the main rate based on updated inflation forecasts and will ensure the necessary monetary conditions to achieve the 5 percent inflation target.
