Inflation in Uzbekistan will decline to 5% target in H2 2027 - Central Bank

TASHKENT. Nov 5 (Interfax) - The Central Bank of Uzbekistan expects inflation in the country to decline to the target level of 5% in H2 2027, according to the published draft of the monetary policy guidelines for 2027-2029.

The Central Bank's board approved the document at a meeting on November 4.

According to the guidelines, Uzbekistan's GDP growth will be 7%-7.5% in 2027, and 6.5%-7.5% annually in 2028-2029.

"Inflation is forecast to slow to the target of 5% in H2 2027 and stabilize at this level in subsequent years," the Central Bank said.

The priority areas of monetary policy for 2027-2029 are maintaining tight monetary conditions until inflation stabilizes; developing a monetary policy strategy and strengthening the transmission mechanism; managing banking system liquidity and improving the operational mechanism; modernizing the system of macroeconomic analysis and forecasting; developing financial markets and risk hedging instruments, and enhancing communication, openness and the accountability of monetary policy.

According to the Central Bank's estimates, inflation in Uzbekistan will be 7% in 2026.

The Central Bank also assessed alternative scenarios related to a possible deterioration in external and internal conditions. Among the main risks cited are a significant depreciation of the currencies of major trading partners, a sharp rise in world oil and food prices, and accelerated lending amid increased competition in the banking sector. The realization of these factors could lead to higher inflation than envisaged by the baseline forecast.

A separate section of the document is devoted to improving the effectiveness of monetary policy. In particular, in 2027-2029 the Central Bank plans to develop a monetary policy strategy and a roadmap for its implementation, and to improve management of banking system liquidity. Provision is made for developing instruments for providing and attracting liquidity for Islamic banks in line with Sharia principles. The regulator also intends to modernize the systems of macroeconomic analysis and forecasting.