The BOD of the Central Bank decided to keepthe interest rate unchanged at 13.5 percentage points per annum at its meeting today.
“Against the backdrop of high demand and persistent upward pressure on prices in the economy In recent months, a slower decline in the inflation rate compared to the forecast figures and a higher formation of inflation expectations has been forming. By the end of this year, overall inflation is expected to be at the upper limits of the forecast corridor. In order to create a basis for curb inflationary processes and expectations and the inflation rate to the 5 percent target in the medium term, the tightness of monetary and credit conditions has been maintained at the current level,” the Central Bank said in a statement.
The annual inflation rate has decreased slightly in the last two months, reaching 10 percent at the end of November. The decrease in inflation was mainly due to the stabilization of food prices. The risks of an increase in prices for services and non-food goods remain due to the high consumption and investment activity in the economy supporting aggregate demand.
Changes in some spending as part of primary needs of the public and the emergence of secondary effects of the liberalization of energy prices with the onset of cold weather are also reflected in the inflation expectations of economic entities. In November, the inflation expectations of the public and businesses accelerated to 13.7 and 12.7 percent, respectively.
As a result, GDP growth is expected to show stable trends in the second half of 2024 and to be around 6-6.5 percent by the end of the year.
In order to achieve a stable decrease in inflation to the 5 percent target in the medium term, sufficiently tight monetary conditions will be ensured. In this regard, special attention will be paid to the balance of supply and demand in the economy, inflation expectations, and the pace of structural reforms.
If there are indications and grounds for increasing the current high demand and upward pressure on prices in the economy in the coming quarters, the key rate may be revised upwards.
