The Central Bank sees room to ease monetary conditions gradually by about 2 percentage points, Deputy governor Nodirbek Achilov said on Nov. 4, after the board kept the rate at 14% a year.
“All our models and indicators point to room for a cut of about 2 percentage points,” Achilov told a press conference on the rate decision and the 2027-2029 policy guidelines. He said the gap between the rate and forecast inflation is about 7 percentage points, against an estimated neutral real rate of about 5%. The board also considered a cut to 13.5%, but most members backed holding the rate, he said.
Asked whether the bank could cut while fuel, food and other prices keep rising, Achilov said the regulator looks at the inflation forecast as well as current price growth. The bank needs to see inflationary pressure ease across other components of the consumer basket, not only individual goods and services, he said.
Annual inflation was 6.4% in September, up slightly from August, driven by seasonal increases in fruit and vegetable prices, higher fuel prices and some services. Services inflation was 7%, while core inflation, which excludes seasonal and regulated prices, held at 5.5%.
“In recent months, supply-side factors have become increasingly visible in inflation dynamics,” Achilov said. Whether they prove temporary depends on how far they spread to other prices and inflation expectations, he said.
On fuel, Achilov distinguished between primary effects, such as higher prices for gasoline and gas, and secondary effects, when higher fuel costs push up transport, logistics and other prices. The extent of that pass-through depends largely on competition and domestic demand, he said, citing the taxi market, where new ride-hailing platforms have in some cases forced larger players to cut prices.
“We cannot directly influence the primary effects,” he said. How far they feed into logistics and other sectors “largely depends on demand.”
If demand from households and businesses stays high, fuel price rises are more likely to feed into transport and freight costs, he said. Monetary policy’s main task is to limit these secondary effects and keep demand balanced.
Under the bank’s baseline scenario, headline inflation should approach the 5% target in the second half of 2027 and stay near it in 2028-2029, with core inflation falling to 4-5% in 2027 and stabilizing at about 4%.
Achilov said earlier that the rate could fall to a single digit in 2027-2029 if inflation slows durably to 5% and expectations fall further.
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