In a recent board meeting on December 14, 2023, the Central Bank of Uzbekistan (CBU) opted to keep the key interest rate steady at 14% for the annual period. Despite a slowdown in inflationary processes, the central bank expressed concerns about the lingering uncertainty regarding the sustainability of this trend.
With high gross demand persisting, achieving the goal of reducing inflation to the target level of 5% by 2025 necessitates the continuation of relatively strict monetary and credit conditions, official release of CBU reported.
The inflation rate experienced a decrease in October-November, registering at 8.8% annually. This decline is attributed to factors such as the impact of last year's high base, reduced contributions from import prices, and the yet-to-be-realized effects of increased energy tariffs for legal entities. Additionally, the ongoing maintenance of relatively strict monetary and credit conditions played a role in curbing inflation.
Forecasts for 2024 anticipate an inflation rate within the range of 8-9% under basic forecast conditions. However, external risks, including non-market restrictions and fragmentation in international trade, pose potential threats to inflation levels. The effects of the next adjustment in regulated prices are also expected to manifest in the coming quarters.
While core inflation has shown a slowing trend since the beginning of the year, reaching 9% annually in November, there is observed pressure on certain goods. Achieving a steady decline in inflation is anticipated to take time. Inflationary expectations of both the population and entrepreneurs remain higher than the current inflation indicators, hovering around 13-14%.
Global inflationary processes and the volatility of expectations in the world economy and international raw materials markets contribute to the anticipation that external financial conditions will remain firm in the coming quarters.
Earlier Daryo reported that the Central Bank emphasizes that achieving the projected GDP growth of 5-5.7% in 2024, 5-6% in 2025, and 5.5-6.5% in 2026 relies on heightened foreign direct investments and the internal production capacity of private sectors.
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