Central Bank of Uzbekistan again holds policy rate at 14%

TASHKENT. Nov 5 (Interfax) - The Central Bank of Uzbekistan's board has decided a to keep the key policy rate at 14% per annum, the regulator said in a press release.

Inflation expectations have eased and price growth is relatively stable, however strong domestic demand and persisting inflationary risks associated with the external environment mean monetary policy must remain tight, it said.

Annual inflation was 6.4% at the end of September, rising slightly compared to August due to price growth for fruit and vegetables, fuel and some services. A higher share of goods and services that have gone up more than 50% in price in annual terms points to persistent inflationary pressure.

Household and business inflation expectations continue to ease. In September, households expected prices to rise 8.7% over the next 12 months, while businesses thought they would go up 9.2%.

"High global food price volatility and risks related to energy prices are causing inflationary pressure from outside to mount. Their impact on domestic prices through imports, production and transportation costs could slow further decline in inflation in Uzbekistan," the Central Bank said.

It said GDP grew 8.3% in 9M 2026, thanks mainly to industry, construction and services.

The Central Bank expects domestic demand to remain strong in the coming months due to investment activity and rising real incomes. In view of these factors, the GDP growth forecast has been revised upward. The regulator now forecasts GDP growth of 8% for the year, the previous estimate being 7.5%-8%.

The Central Bank has revised its inflation forecast for 2026 from 6.5% to approximately 7% due to strong domestic demand, the risk of higher energy prices in global markets and a planned increase in certain regulated prices.

"Money market rates are close to the key rate. Real rates on deposits and loans remain positive, maintaining the appeal of savings, and helping to balance aggregate demand with manufacturing potential," the Central Bank said.

Central Bank Deputy Governor Nodirbek Achilov said the regulator's board discussed holding the key rate at 14% or lowering it to 13.5% at the November 4 meeting. Arguments in favor of lowering it included the drop in inflation expectations and stabilizing core inflation. However rate reduction requires further discussion, he said.

The regulator does hold open the possibility of cutting the rate gradually to below 10% in 2027-2029, Achilov said. It will be possible to lower the rate to single figures if inflation slows sustainably to the 5% target and the inflation expectations of households and businesses decline further.

But there is no schedule for rate reduction. "Decisions to ease monetary policy will depend on actual inflation dynamics, inflation expectations and an assessment of economic risks," he said.

The Central Bank is due to hold its next key rate meeting on December 16.

The rate has been 14% since March 24, 2025, when it was raised from 13.5%.