The Board of the Central Bank of Uzbekistan has decided to maintain the policy rate at 14.0% per annum, following its regular meeting held on June 12, 2025. The decision aims to contain persistent inflationary pressures and support a stable decline in headline inflation over the medium term.
The Bank noted that while headline inflation declined slightly in May to 8.7% year-on-year—reflecting the fading effects of last year’s energy tariff hikes—inflationary pressures remain elevated. Core inflation, which excludes volatile items, continued its upward trend and reached 8.5% in May, driven by rising service prices.
Despite the slowdown in headline inflation, both household and business expectations remain above current inflation levels, signaling continued concern about price growth.
High economic activity in the first five months of 2025 has been a key driver of aggregate demand. This is evidenced by increased revenues from trade and paid services, a rise in cross-border remittances, a surge in real estate transactions, and elevated interbank activity. Meanwhile, credit expansion and higher budget spending have further supported domestic demand.
The Central Bank also highlighted the influence of global trends, noting that tight monetary conditions abroad and rising international food prices could pose additional risks to domestic inflation. However, strong export earnings, steady foreign investment inflows, and appreciation in partner country currencies are helping stabilize the foreign exchange market and mitigate exchange rate-related price pressures.
In light of these dynamics, the Central Bank affirmed its commitment to a restrictive monetary policy stance, which it says is essential to curb lending growth and support deposit accumulation—factors that are vital in managing domestic demand and controlling inflation.
The Board emphasized its goal of reducing inflation to the 5% target in the medium term. It also signaled the possibility of adjusting policy if demand-side pressures intensify further in the coming months.
The next meeting of the Central Bank’s Board to review the policy rate is scheduled for July 24, 2025.
On July 25, 2024, the Central Bank reduced the policy rate by 0.5 percentage points to 13.5%, marking the first drop below 14% in seven years. The rate remained unchanged until March 20, 2025, when the Board raised it by 0.5 percentage points to the current 14% level, where it now remains.
Follow Daryo's official Instagram and Twitter pages to keep current on world news.
Comments (0)