Uzbekistan Central Bank keeps main interest rate at 14%

TASHKENT. July 27 (Interfax) - The Board of the Central Bank of Uzbekistan on Thursday decided to keep the country's main interest rate unchanged at 14%, the press service of the Central Bank reported.

"Despite the decline in inflation and inflationary expectations, the main rate was left unchanged in order to ensure the formation of inflation by the end of the year within the forecast range in the presence of continuing price pressure associated with demand factors," the report says.

According to the Central Bank, since the beginning of the year, inflation has been slowing, and reached 9% in June on an annualized basis with relative stabilization of import and regulated prices.

Core inflation, calculated without the influence of administrative and seasonal factors on prices, slowed down more slowly than expected to 11.3% in June. Average annual inflation has also formed above the current level of "normal" inflation.

Economic growth in H1 2023 reached 5.6% and was higher than during the same period last year, the Central Bank said.

"Based on updated forecasts, given the ongoing adaptation of the economy to external economic conditions and the persistence of some uncertainty, real GDP growth in 2023 is expected to reach 5-6%," the report says.

As part of the base scenario of macroeconomic development, the inflation forecast for the end of 2023 was left unchanged at 8.5-9.5%.

"The transition of both the core inflation forecast and of inflationary expectations to a confident downward trajectory increases the likelihood of a reduction in the main rate in the near future," the press release notes.

On March 17, 2022, the Central Bank of Uzbekistan raised the main rate from 14% to 17% amid high uncertainty and tension on the world stage. In June 2022, it was reduced to 16%, and in July to 15%. Since September, the main rate has remained at 15% per annum, and since March 16, 2023, it is back at 14%, the level of a year ago, due to positive trends in the economy.

The next meeting of the Board of the Central Bank of Uzbekistan is scheduled for September 14, 2023.

The official exchange rate on July 27 is 11624.92 som/$1.