28 Nov 2023 13:13

Kyrgyzstan's National Bank again approves discount rate of 13% per annum, will remain at this level for a year

BISHKEK. Nov 28 (Interfax) - The Board of the National Bank of the Kyrgyz Republic decided to maintain its discount (key) rate at 13%, the decision comes into force on November 28, the institution's website says.

The discount rate of 13% per annum has been valid in Kyrgyzstan for one year since November 29, 2022.

"The monetary policy measures of the National Bank contributed to the downward trend in inflation. The annual inflation rate shows a gradual decline; in November 2023 it was 8%, which is 6.7 percentage points lower than the figure at the beginning of 2023," the report says.

Considering temporary measures for the state regulation of prices, their growth for some food products in annual terms decreased from 15.8% at the beginning of the year to 3.9% in November. Prices for non-food goods and services remain at their previous values "reflecting the effect of tariff policy measures and observed increased domestic demand."

Real GDP grew 4.5% from January through October. The main contributing factor was strong activity in the services and manufacturing sectors. Growing domestic consumption is due to the continued increase in consumer lending and rising real wages.

In the monetary sector, trends observed since the beginning of this year have continued. Short-term money market rates have moved in common with the dynamics of the key rate and continue to remain within the corridor established by the National Bank. The banking system has sufficient liquidity both in som, and foreign currency terms. The situation on the domestic forex market is stable.

"The emerging price environment of lower prices on world food markets is having a favorable impact on domestic prices for certain goods in the consumer basket. Meanwhile, the remaining high uncertainty and heterogeneity in the external environment associated with geopolitical risks still remain pro-inflationary factors for the republic's economy," the report says.

"The decision to maintain the discount rate at 13% contributes to achieving target inflation rates of 5-7% in the medium term," the regulator said.