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National Bank of Kyrgyzstan raises discount rate for the first time in 9 months

The National Bank of Kyrgyzstan raised the discount rate by 0.75 percent — to 5 percent. This decision was made by the Board of the National Bank of the Kyrgyz Republic.

The National Bank noted that prices in Kyrgyzstan show moderate growth. As of February 14, inflation rate was 3.9 percent in annual terms. The rise in prices of food products exerts inflationary pressure on the general price level.

«Development of the country’s economy is still largely influenced by external economic conditions. Economic activity persists in the countries — main trade partners of Kyrgyzstan. Trends on global and regional food markets will continue gradual growth in the coming periods,» the National Bank stressed.

The National Bank forecasts inflation approaching the lower boundary of the target in the second quarter subject to the limited influence of external and the absence of internal shocks.

Aggregate demand in the Kyrgyz economy continues to be supported both through maintaining economic activity within the country, and by growing economies of the countries — the main trading partners that demand domestic goods and services. Positive trends continue in the monetary and financial sectors of the economy. Activity on the interbank credit market persists.

«Decisions on the key rate are made taking into account the actual level and the forecast dynamics of inflation relative to the target of 5-7 percent in the medium term. Taking into account the preconditions for development of external environment, the emerging internal conditions, as well as the forecast dynamics of inflationary processes in the medium term, the National Bank decided to raise the discount rate,» the bank said.

The next meeting of the Board of the National Bank on the discount rate issue will be held on March 30, 2020.

Recall, the discount rate has remained unchanged since May 28, 2019, when the National Bank set it at 4.25 percent.