The Board of the National Bank raised the discount rate (key rate) by 50 basis points — up to 8 percent. Website of the National Bank of the Kyrgyz Republic says.
Growth of business activity in the world and in the countries-trading partners of Kyrgyzstan is slowing down against the background of an active phase of economic recovery and the introduction of new restrictive measures against outbreaks of COVID-19. The persisting restrictions in global supply chains, together with the consequences of stimulus measures aimed at minimizing the consequences of the pandemic, are responsible for a high inflationary background in all countries of the world.
Economic development demonstrates moderate growth rates in Kyrgyzstan. The phase of recovery of the country’s economy to the pre-pandemic level has not been completed.
At the end of 10 months of 2021, real GDP growth reached 1.6 percent. GDP growth excluding Kumtor reached 4.1 percent. The positive dynamics of economic recovery is supported by the growing volume of remittances to the country. In January-September 2021, their net inflow increased by 19 percent and reached about $1.6 billion.
Amid growing inflationary background and expectations, the National Bank continued to tighten monetary conditions.
Short-term interest rates in the money market increased, following the key rate, and formed within the interest rate collar.
«Tactical decisions in the field of monetary policy were made in the context of a significant increase in excess liquidity in the banking sector and the prevalence of short-term money in it. In these conditions, the short segment of the money market was characterized by a higher activity of the participants. In general, the monetary policy pursued by the National Bank made it possible to increase the profitability and attractiveness of assets in the national currency. The situation in the domestic foreign exchange market remains stable,» the National Bank said.
Taking into account the prerequisites for the development of the external environment and internal economic conditions, the National Bank decided to increase the size of the discount rate.
In case of any risks, the National Bank of the Kyrgyz Republic does not exclude the possibility of making additional adjustments to the ongoing monetary policy.
«The National Bank regularly assesses external and internal factors influencing inflation and, depending on the economic situation, will take appropriate monetary policy measures,» the bank concluded.
The discount rate of the National Bank has remained unchanged for the last four months.
