The Central Bank kept its interest rate at 14% today at its BOD meeting, after weighing a cut to 13.5%, and said it may gradually lower the rate below 10% during 2027-2029 if inflation falls to its 5% target.
The CB's deputy governor Nodirbek Achilov told a news conference that a single-digit rate would require a sustained slowdown in inflation and continued declines in inflation expectations. He stressed there is no preset schedule for cuts.
“The option of keeping the key rate at 14% received more votes from board members,” Achilov said.
He said the board considered two options: holding at 14% or cutting to 13.5%. A cut was weighed because of falling inflation expectations, stabilizing core inflation and positive trends in the national currency.
The bank still considers tight policy necessary because of strong domestic demand and external inflation risks. Annual inflation rose to 6.4% in September from 6.2% in August, driven by higher prices for some foods, fuel and services. Services inflation reached 7%.
Under the Central bank’s baseline scenario, inflation should approach 5% in the second half of 2027 and stabilize around that level in 2028-2029. Core inflation, 5.5% in September, is expected to fall to 4-5% in 2027. The bank also sees a gradual move from tight to neutral policy, with a real interest rate of 4-5%.
The bank also plans to review its interest rate corridor, currently plus or minus 2 percentage points around the key rate, and may narrow it gradually as policy eases.
The rate has been 14% since March 2025, when the Central bank raised it from 13.5%. It has held it steady since, citing the need to contain inflation.
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