Kyrgyzstan National Bank again maintains key rate at 13%

BISHKEK. Aug 29 (Interfax) - The Board of the National Bank of Kyrgyzstan decided to keep the discount (key) rate at 13%, the regulator's press service reported.

The rate has been at this level since November 2022.

According to the National Bank, there is a downward trend in annual inflation in Kyrgyzstan: in August 2023 (as of the 18th), inflation in annual terms was 9.4%, and is 5.3% since the beginning of 2023. Seasonal declines in prices for fruits and vegetables, oils and fats help to slow down food inflation, but stable prices for non-food goods and services, on the contrary, hold back the overall slowdown.

Consumer activity in the service sector is the main driver of growth in the Kyrgyz economy, the regulator said. In January-July 2023, real GDP growth totaled 2.9%.

"The ongoing fiscal policy and growing volumes of consumer lending contribute to the expansion of public and private consumption, maintaining domestic demand at a relatively high level. The banking system is seeing an expansion in its resource base and maintaining a high level of som liquidity, thereby supporting the growth of lending to the economy," the National Bank said.

In general, pro-inflationary risks persist in the short and medium term. Inflationary expectations remain stable, the National Bank said.

With this in mind, the National Bank decided to keep the discount rate at 13%. The National Bank believes that the decision will further slow domestic inflationary processes and achieve inflation targets of 5-7% in the medium term.

The next scheduled meeting of the Board of the National Bank of Kyrgyzstan to discuss the key rate will be held on October 30, 2023.