Uzbekistan's Central Bank on May 4 decided to maintain the basic rate at 14% per annum. This move is anticipated to have a moderating effect on price growth.
The Central Bank acknowledged that the annual inflation rate for March and April had continued to decelerate to 11.7% and 11.0%, respectively. This decrease was attributed to seasonal factors and the high base effect of the previous year. Nonetheless, the higher rate of core inflation compared to general inflation suggests that inflation risks still loom over the economy.
The rise in consumer demand is attributed to several factors, including the high growth rate of international remittances last year, the increase in government spending this year, and wage and benefit increases. However, there is growing uncertainty about the prices of major export commodities due to high volatility in world commodity markets.
The Central Bank also expressed its intention to balance credit growth and apply macro-prudential policy measures to prevent financial and macroeconomic stability risks caused by increasing the debt burden. As a result, they anticipate real GDP growth to be higher in 2023 than previously forecasted, while the year-end inflation forecast remains at 8.5-9.5%.
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