The Board of the Central Bank of Uzbekistan decided to raise the policy rate by 0.5 percentage points to 14% per annum, at its meeting on March 20. The decision comes in response to sustained inflationary pressures, rising inflation expectations, and growing demand.
The Central Bank stated that the rate hike aims to contain inflation expectations and address inflationary risks anticipated in the coming months. This measure is expected to create favorable conditions for achieving the medium-term inflation target of 5 percent.
Since the beginning of 2025, headline inflation has increased slightly, reaching 10.1 percent year-on-year in February. The rise has been driven by higher prices for fuel, utilities, transportation, education, and medical services, which have also contributed to heightened inflation expectations. In February, household inflation expectations reached 15.3%, while business entities projected inflation at 13.8%.
Strong aggregate demand, supported by increasing cross-border remittances and consumer lending, has contributed to rising inflation in the services sector. This trend is reflected in retail trade turnover and revenues from paid services. Additionally, the real effective exchange rate has shown a downward trend due to the appreciation of major trading partner currencies.
To ensure price stability, the Central Bank emphasized the necessity of tightening monetary conditions to balance aggregate demand and supply. The rate hike is expected to slow inflationary processes in the coming quarters, with a goal of bringing headline inflation down to 7–8% by the end of the year.
The Central Bank affirmed its commitment to maintaining sufficiently tight monetary conditions to gradually bring inflation to the 5% target in the medium term. If stronger-than-expected pressures on aggregate demand and prices emerge, the level of monetary restriction will be reconsidered.
The next Central Bank Board meeting to review the policy rate is scheduled for April 24, 2025.
The last change in the policy rate occurred on July 25, 2024, when the Central Bank reduced the key rate by 0.5 percentage points to 13.5% per annum, marking the first time in seven years it fell below 14%. Since then, the rate had remained unchanged.
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