Central Bank keeps key interest rate unchanged at 14% per annum

On April 24, the Central Bank’s Board of Directors decided to keep the key interest rate unchanged at 14 percent.

The regulator issued an official press release explaining the rationale behind this decision.

According to the Central Bank, recent headline and core inflation figures indicate that inflationary processes remain uncertain and unresolved. The continued imbalances between demand and supply, coupled with escalating external risks, have compelled the regulator to maintain current tight monetary conditions.

“This decision aims to bring inflation indicators and expectations back to a steady downward trend and to create favorable conditions for achieving the 5 percent inflation target in the medium term,” the official statement reads.

Data from the Central Bank show that since the beginning of the year, headline inflation has followed an upward trajectory, reaching 10.3 percent year-on-year in March. Core inflation also continued to accelerate, hitting 8.1 percent year-on-year. This suggests that, alongside supply-side factors, demand-side pressures are also contributing to rising prices.

“Although inflation expectations among the public and businesses declined in March due to improvements in fuel and energy supply and the relative stabilization of the exchange rate, these expectations remain above current inflation figures.

The primary effects of energy price liberalization in 2024 are expected to conclude by the end of the second quarter, exerting a downward influence on overall inflation. In addition, worsening international trade conditions, rising global consumer prices, increasing production costs, and intensifying external inflationary pressures present further risks,” the regulator noted.

Updated forecasts suggest that by the end of 2025, headline inflation will remain near the upper boundary of the projected 7–8 percent range.

Economic growth accelerated to 6.8 percent in the first quarter, driven by increased consumer and investment activity. A surge in cross-border remittances and a faster pace of lending have also supported aggregate demand.

The Central Bank projects that the trend of GDP growth will continue throughout 2025, reaching approximately 6 percent by year-end. Private investment is expected to play a key role in sustaining economic growth by contributing to the expansion of goods and services supply.

Since the beginning of 2025, the real effective exchange rate has been forming within its medium-term trend, supported by the strengthening of the currencies of Uzbekistan’s key trading partners and the relative stability of the UZS against those currencies.

Furthermore, the continuation of the current tight monetary policy is expected to moderate the growth of lending and sustain the high growth rates of deposits. This, in turn, is anticipated to help balance aggregate demand and reduce the impact of monetary factors on inflation.

Taking all these factors into account, the Central Bank’s Board of Directors has decided to keep the key interest rate unchanged at 14 percent in order to ensure price stability over the medium term.

The Central Bank also reiterated its commitment to maintaining sufficiently tight monetary conditions to achieve the medium-term inflation target of 5 percent.

The regulator added that the upcoming phase of energy price liberalization expected in May could prompt a review of monetary policy depending on its secondary effects on inflation and inflation expectations.

For reference, the next meeting of the Central Bank’s Board on reviewing the key rate is scheduled for June 12, 2025.

It should be noted that during the previous meeting on March 20, the Central Bank raised the key interest rate by 0.5 percentage points to 14 percent, citing persistent inflationary pressures, steadily rising demand, and heightened inflation expectations.