The Central Bank of Uzbekistan (CBU) has announced its decision to keep the main interest rate unchanged at 14% per annum. This decision was confirmed during the Board meeting held on June 13, as reported by the bank's press service.
In May, general inflation in Uzbekistan saw an acceleration, primarily driven by increased prices for household energy resources, reaching an annual rate of 10.6%. When the impact of energy prices is excluded, the inflation rate stands at 6.8%, attributed to a significant seasonal decrease in food inflation.
The reduction in monetary factors' influence on general inflation has continued the downward trend in core inflation dynamics, which reached 6.3% in May. Core inflation in the services sector has also seen a slight decrease since the beginning of the year, amounting to 8.8%.
The sustained downward trend in stable components of inflation indicates a broad-based slowdown in base inflation. More than 70% of goods and services in the consumer basket have experienced a slower price increase compared to last year’s figures.
Inflationary expectations among the population and businesses have risen due to discussions on changes in energy tariffs in April and the cancellation of certain tax benefits.
These expectations were recorded at 14.0% and 13.3%, respectively. By May, the population's expectations remained steady at 14.0%, while those of entrepreneurs decreased to 12.7%. The impact of tariff changes on inflationary expectations has proven to be lower than initially anticipated.
"This development supports the forecast that macroeconomic development indicators and the year-end inflation level will remain within the main scenario forecasts," CBU stated.
The main rate of CBU is a crucial instrument in conducting monetary policy under the inflation-targeting regime. It serves as the target interest rate for the Central Bank's monetary and credit operations with commercial banks.
By adjusting this rate, the CBU sets the necessary monetary and credit conditions to ensure price stability in the economy.
The decision to maintain the current interest rate follows a reduction on March 16, 2023, when the main rate was decreased by 1 percentage point to 14% per annum. Since then, the rate has remained unchanged.
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