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National Bank of Kyrgyzstan keeps discount rate at 5 percent

The Board of the National Bank decided to keep the discount rate (key rate) at 5 percent yesterday. Chairman of the National Bank of Kyrgyzstan Tolkunbek Abdygulov told at a press conference.

According to him, the uncertainty regarding recovery of the global economy, including the trajectory and time horizon of recovery, remains at a high level. The prospects for development of the global and regional economy depend on many factors, such as the development of the pandemic situation, effectiveness and timeliness of the anti-crisis measures taken, and restoration of foreign economic activity, the assessments of which currently remain ambiguous.

Restrictive measures to curb the spread of coronavirus have led to a decline in production in almost all sectors of the economy of Kyrgyzstan.

«The decline in economic activity is observed primarily in the services sector, construction and industry. It is expected that this trend will continue in the short term. A limiting factor in domestic consumption is also a reduction in the volume of export earnings and remittances from labor migrants, which are a significant source of household income,» Tolkunbek Abdygulov stressed.

The situation in the monetary sector as a whole has not undergone significant changes. Gradual growth of the loan portfolio and deposit base continue. Short-term money market rates have a common direction with the National Bank discount rate, which continue to fluctuate within the established interest rate collar. The interbank credit market has been the most active over the past two months compared to the period at the beginning of the year. The domestic foreign exchange market is balanced by market demand and supply of foreign currency. In May 2020, the National Bank did not conduct foreign exchange interventions.

The monetary and macroprudential measures taken by the National Bank will mitigate the negative effects of coronavirus in the banking and financial systems as a whole.

«Taking into account the prerequisites for development of the external environment and the current internal conditions, the National Bank decided to keep the discount rate at 5 percent, taking into account the need to maintain measures to stimulate the real sector of the economy,» the Chairman of the National Bank said.

The next meeting of the Board of the National Bank on the discount rate issue will be held on June 29, 2020.

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