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National Bank of Kyrgyzstan keeps discount rate at 4.25 percent

The Board of the National Bank of Kyrgyzstan kept the discount (key) rate at 4.25 percent. Website of the bank says.

Inflation in the country remains low, showing a moderate upward trend within expectations. On January 17, 2020, inflation amounted to 2.8 percent in annual terms. Increase in prices for food products, in particular for fruits, vegetables and dairy products, makes an additional contribution to the dynamics of the general price level since the beginning of the year.

«Formation of inflation during the current year will largely depend on the situation on world commodity markets and the economic situation in the states — trade partners of the Kyrgyz Republic. Trends on the global and regional food markets will continue to grow gradually in the coming periods,» the statement says.

The monetary policy of the National Bank in 2020 is aimed at keeping inflation within 5-7 percent.

Economic activity in the republic persists. The main sectors of the economy continue to make a positive contribution to the country’s economic growth. At the same time, trend to a decrease in the inflow of remittances to Kyrgyzstan remains one of the constraining factors of domestic demand.

«The trends set in 2019 persist in the monetary and financial sectors of the economy. Short-term interest rates in the money market are within the interest corridor established by the National Bank, mainly near the key rate,» the National Bank noted.

Growth of the loan portfolio and deposit base of commercial banks, mainly in national currency, continues. The dollarization level of the economy has reached its historically minimal values.

National Bank

Economists at the National Bank believe that prerequisites for the development of the external environment and the emerging internal conditions determine inflationary dynamics during 2020 at a level not exceeding the range of inflation target values ​​of 5-7 percent in the absence of any external and internal inflationary shocks. Therefore, it was decided to keep the discount rate.

«Decisions on a key rate are made taking into account the actual level and the predicted dynamics of inflation relative to the target, as well as the development of the economy. In case of risks from internal and external conditions, the National Bank may consider the possibility of adjusting the current monetary policy,» the bank said.

The next meeting of the Board of the National Bank of the Kyrgyz Republic on the discount rate issue will be held on February 24 this year.