The Board of the Uzbek Central Bank decided to keep the interest rate at 14% per annum. In spite of keeping tight monetary policies and the efforts aimed at minimizing the impact of monetary factors, there was an increased level of inflationary pressure in Q4 of 2017, the Central Bank said.

Under these conditions, in 2018, the tight monetary policies will be maintained. While, in the current realities, to curb the inflation level the main efforts must be concentrated to minimize the risks associated with non-monetary prerequisites, the Central Bank noted.

Due to potential significant impact of budgetary operations on liquidity  and the money supply, the effectiveness of monetary policies is largely determined by the coordination of monetary and fiscal policies, the statement added.

Future risks are associated with the use of money accumulated in previous periods on budgetary and off-budgetary accounts against the backdrop of intensified implementation of social and economic development programs of the territories.

In addition, there will be certain inflationary pressure by the ongoing adjusting of domestic prices due to liberalization of pricing and foreign trade.

Given the current and expected level of monetary and non-monetary influence factors on price stability on the interest rate, the Central Bank intends to focus on minimizing the impact of the credit channel on the level of money supply and aggregate demand in the economy, as well as maintaining a positive dynamics in the growth of soum savings of the population.

The central bank will also proceed from the nature of the growth factors of the money supply and the formation of consumer and investment demand in the economy.

The excessive increase in the interest rate in the light of the prevailing impact of fiscal and external factors in the dynamics of the money supply may not give the expected results, while adversely affecting business activity and investment processes in the real sector.

In the event of excessive liquidity amount and its excessive growth in the banking system, and an increase in potential inflationary risks from monetary factors, the Central Bank will take additional measures to enhance the anti-inflationary orientation of monetary policy, including by amending the mandatory reservation procedure by banks.