National Bank of Kyrgyzstan holds policy rate at 12%

BISHKEK. July 28 (Interfax) - The National Bank of Kyrgyzstan has decided to hold its key policy rate at 12% per annum, the regulator said on its website.

It said the trends emerging in the global economy amid the Middle East conflict had continued to impact inflation in Kyrgyzstan. Price fluctuations in global food markets, the risk of disruptions to oil product supplies through the Strait of Hormuz and the associated price shock in the global oil market remain key factors in the rising cost of imported goods.

Cumulative inflation was 6.5% since the start of 2026 and annual inflation was 11.3% as of July 2026. Against the backdrop of external factors, food and fuel and lubricants prices have risen the most, also producing secondary effects and so affecting prices for other goods and services in the consumer basket. At the same time, service prices remain elevated as a result of ongoing reforms to fiscalize tax procedures in the hotel and restaurant sector, which shift incurred costs to the cost of services.

Domestic demand in Kyrgyzstan is rising due to ongoing real incomes growth. Investment activity is high, primarily in the construction sector. Nearly all sectors are rising, contributing to double-digit real GDP growth of 11.9% in the first half of the year.

"Due to increased global geopolitical instability and new shocks since the beginning of 2026, the National Bank has tightened monetary conditions to mitigate the impact of external inflationary factors on the country's economy. Since May 2026, tactical steps within the framework of the current monetary policy have been modified, and measures to regulate the volume of money in the economy have been strengthened. Currently, the interbank money and currency markets continue to function steadily, with short-term money market interest rates close to the National Bank's key rate. Commercial banks have surplus liquidity, the level of which is actively regulated by the National Bank's monetary instruments to limit monetary contribution to inflation. It is expected that the National Bank's measures will contribute to an increase propensity for savings by members of the public, maintaining the national currency's purchasing power and paving the way for inflation to slow the 5%-7% target," the regulator said.