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National Bank of Kyrgyzstan keeps discount rate unchanged

The Board of the National Bank decided to keep the discount (key) rate at 5 percent. Website of the bank says.

The worldwide COVID-19 pandemic and the sharp decline in world oil prices have significantly changed the situation in the external environment since the beginning of March 2020. There is a slowdown in the global economy, high volatility of world prices in the commodity and financial markets and a weakening of the currency of the countries — main trading partners.

The impact of external economic conditions along with closure of borders led to certain restrictions on economic activity in Kyrgyzstan.

«Against this background, the moderate growth of the republic’s GDP, which was observed at 4.3 percent during January-February, can be replaced by a decrease in economic activity in the coming quarters,» the statement says.

Decisions on the key rate are made taking into account the actual level and the forecasted dynamics of inflation relative to the target of 5-7 percent in the medium term. The impact of a slowdown in the global and regional economies will have a significant impact on the Kyrgyz economy during this year, reducing domestic demand.

«Given the internal and external conditions, as well as the forecast dynamics of inflationary processes in the medium term, the National Bank decided to keep the discount rate. The financial regulator assesses the factors affecting price and financial stability on an ongoing basis and, depending on the economic situation, will take appropriate monetary policy measures,» the statement says.

The next meeting of the Board of the National Bank of the Kyrgyz Republic on the discount rate issue will be held on May 25.