National Bank of Kyrgyzstan holds policy rate at 14%

BISHKEK. Aug 30 (Interfax) - The National Bank of Kyrgyzstan's management board has decided to hold the key policy rate at 14% per annum, the regulator said in a statement, posted on its website.

The National Bank said persistently high global inflation with geopolitical uncertainty remained significant factors in the development of the economic situation in Kyrgyzstan. In these conditions, the National Bank continues to pursue a monetary policy aimed at containing inflationary processes and mitigating external economic risks.

Annual inflation was 15.4% in August. The absence of seasonal deflation this summer has been the main manifestation of persistent inflationary pressure. At the same time, inflation is expected to slow in the first half of 2023 as the global economy stabilizes and adapts to new trade and economic ties in global commodity markets.

Economic activity in Kyrgyzstan is supported by a steady recovery of domestic demand. The economy grew 7.7% in January-July 2022. The biggest growth by sector has been in industry, services and agriculture. Higher lending and remittances are a further stimulus for domestic demand.

The National Bank of Kyrgyzstan raised its policy rate 150 basis points to 10% from 8.5% on February 28 and by another 400 bps to 14% at an extraordinary meeting on March 10.

The next decision on the policy rate will be made on October 31, 2022, but the regulator is prepared to hold an extraordinary meeting if necessary.