For the first time in eight months, the National Bank of Kyrgyzstan changed size of the discount rate and lowered it by 0.25 percent to 4.5 percent. The Chairman of the National Bank of the Kyrgyz Republic Tolkunbek Abdygulov said at a press conference today.
According to him, prices’ growth in Kyrgyzstan remains low. Since the beginning of 2019, inflation has been forming at low values and entered a negative zone in February. In February, prices in annual terms fell by 0.7 percent. This applies to almost all groups of goods and services, with the exception of prices for alcohol and tobacco products, which are growing moderately.
«The banking system has a large amount of excess liquidity, so the National Bank continues its sterilization operations. Short-term money market rates are within the percentage range set by the National Bank of the Kyrgyz Republic. An increase in activity in the interbank credit market is caused by both an increase in the number of participants and the volume of operations. The gap between interbank money market rates and the discount rate is narrowing, which increases the impact of monetary policy on the economy,» Tolkunbek Abdygulov stressed.
The situation in the domestic foreign exchange market is generally stable and does not create significant risks.Tolkunbek Abdygulov
Forecasts for development of the economies of the countries — trade partners of Kyrgyzstan and domestic economic conditions make it possible to expect the continuation of positive trends in the short and medium term. Under these conditions, it was decided to lower the discount rate. In case of inflation risks, the National Bank may consider the possibility of adjusting the current direction of the monetary policy.
The next meeting of the Board of the National Bank on the discount rate issue will be held on March 25, 2019.