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National Bank of Kyrgyzstan keeps discount rate at 5 percent

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

Spread of COVID-19 pandemic in the world, volatility of world prices in commodity markets and heterogeneity of the development of the world economy continue to negatively affect development of the countries in the region and the economy of Kyrgyzstan. Economic activity in the country remains low.

A significant decline in production volumes is observed in almost all sectors of the economy, except for agriculture.

National Bank    

"Movement of the economy of Kyrgyzstan towards positive sustainable growth rates will largely depend on the epidemiological situation in the country and the pace of recovery of the economies of the countries - trading partners," the National Bank stressed.

Monetary conditions in general have not undergone significant changes. Short-term money market rates approached the discount rate of the National Bank and continue to fluctuate within the established interest rate collar. Activity of money market participants increased in the short segment, mainly in open market operations.

Volatility in commodity markets, continued restrictions in a number of countries due to the COVID-19 pandemic and the associated low-key expectations of global economic growth determine volatility in the global financial markets.

There was an excess of demand for foreign currency over its supply in the domestic foreign exchange market during 2020, which led to foreign exchange interventions by the National Bank to smooth out sharp fluctuations in the exchange rate.

There has been a positive trend in the inflow of remittances from individuals to the country. At the end of January-November 2020, the net inflow of remittances amounted to $ 1.7 billion, increasing by 1.2 percent compared to the same period in 2019.

»Taking into account the prerequisites for development of the external environment and the emerging internal economic conditions, the National Bank decided to keep the discount rate at the level of 5 percent. In case of any risks, the National Bank does not exclude possibility of adjustments to the current monetary policy. The National Bank regularly assesses external and internal factors influencing inflation and, depending on the economic situation, will take appropriate measures of monetary policy,” the statement says.

The next meeting of the Board of the National Bank on the discount rate will be held on February 22, 2021.