National Bank of Kyrgyzstan raises key rate to 9.25%

BISHKEK. July 29 (Interfax) - The board of the National Bank of Kyrgyzstan has decided to raise the discount (key) rate by 25 basis points to 9.25%, with the decision taking effect on Tuesday.

Inflation in Kyrgyzstan remains moderate, the National Bank said. Consumer price growth in January-June 2025 amounted to 4.6%, and was 8.7% year-on-year in June. The current price dynamics are driven by temporary and seasonal factors, including the low base effect from the same period last year. Within the inflation structure, the most significant price increase was recorded in the food group of goods due to seasonal and temporary effects, as well as relatively high inflation in Kyrgyzstan's trading partner countries. In the non-food component of inflation, the main contribution came from the adjustment of electricity prices as part of a planned tariff increase.

Economic conditions in the country have not undergone significant changes. Economic activity remains high, with domestic demand continuing to expand amid rising household incomes. Investment in fixed capital is also growing. In January-June 2025, real GDP growth was 11.7% YoY, primarily driven by expansion in the services, construction and industrial sectors.

"Monetary conditions aim to ensure price stability in Kyrgyzstan within the established medium-term target range of 5%-7%. The monetary policy measures being taken help to maintain stability in the interbank money market. Overall, the country's banking system retains a high level of liquidity in the national currency, and under these conditions, the National Bank conducts monetary operations to maintain a balanced level of money supply in the economy," the bank said.

The foreign exchange market situation is stable, while the exchange rate remains flexible under conditions of market-driven supply and demand for foreign currency.

At the same time, this year the level of uncertainty in the external economic environment has increased significantly due to the rising influence of geopolitical factors and changes in global trade policy, resulting in external pro-inflationary factors and price volatility in global food and commodity markets, the bank said.

"Under these conditions, taking into account the analysis of inflation factors in the short- and medium-term, and bearing in mind that the monetary policy of the National Bank is forward-looking, it is deemed appropriate to raise the discount rate by 25 basis points to 9.25% to maintain price stability in the country in the medium term," it said.

The National Bank will continue to assess external and internal inflationary factors. If any risks to price stability arise, the regulator does not rule out the possibility of adjusting its monetary policy, it said.

The next scheduled meeting of the National Bank's board on the key rate will take place on August 25.

The rate had remained at 9% per annum since May 2024, when it was reduced from 11%.