National Bank of Kyrgyzstan holds policy rate at 13%

BISHKEK. Feb 28 (Interfax) - The National Bank of Kyrgyzstan's management board has decided to hold the key policy rate at 13% per annum, National Bank spokeswoman Aida Karabayeva said at a press conference on Tuesday.

The inflationary background in Kyrgyzstan will remain relatively moderate and reflects the general trends of the last several months. From the beginning of 2023 through February 17, consumer prices have risen 2.8%, with inflation at an annualized rate of 15.9%, she said.

Current inflation reflects the seasonal price increase for fruits and vegetables as well as the continued secondary effects of previously established inflationary factors. Price volatility in world commodity markets, and the increase in a number of administered prices, i.e. tariffs, remain, as before, pro-inflationary factors, she said.

"Economic activity in Kyrgyzstan has increased, and domestic demand is also recovering. The growth rate of real GDP in January 2023 was 4.8%. The largest production increase was seen in the industry, services and agriculture sectors. An increase in both credit activity and real wages had an additional stimulating effect on the growth of domestic consumption. The measures taken by the National Bank are contributing to maintaining the relatively stable situation in the money and foreign exchange markets. The financial and banking system remains stable. The banking system has sufficient liquidity in the national currency," Karabayeva said.

At the same time, continuing high uncertainty in the external environment remains a predetermining factor in the development of Kyrgyzstan's economic situation, including inflation dynamics, she said. Therefore, the monetary policy of the National Bank is still aimed at reducing inflation to the medium term target of 5-7%.

The next meeting of the Board of the National Bank on the size of the policy rate will be held on April 24.

The rate has been 13% since November 2022, when it was lowered from 14%.