The Board of the National Bank of Kyrgyzstan decided to raise the discount (key) rate by 150 basis points to 10 percent. Website of the central bank says.
The National Bank notes that Kyrgyzstan’s economy continues to recover from the crisis related to the spread of COVID-19. The persistence of unfavorable epidemiological situation, together with the growth of geopolitical risks in the world are the prevailing factors of the negative impact of the external environment on economic processes within the country, including the dynamics of consumer prices.
Given the overall impact of geopolitical risks on all countries in the region, the terms of trade of the Kyrgyz Republic have not undergone significant changes. However, high uncertainty in global financial markets, formed against the background of growing geopolitical risks, forms additional inflationary pressure in the country.
«The cycle of tightening monetary conditions continues amid measures taken by the National Bank to contain the monetary component of inflation and minimize external economic shocks. At the same time, the situation on the money market remains stable. Short-term rates in the interbank market are rising and are formed within the interest rate collar set by the National Bank,» the statement reads.
The key performance indicators of financial and credit institutions show a sufficient margin of safety. This allows to maintain stability of the financial and banking system.
At the same time, the banking system has sufficient liquidity in the national currency.
The National Bank stressed that in today’s realities, the integration of Kyrgyzstan’s economy into the global economy carries risks of external shocks affecting the return to sustainable economic development of the country. In these circumstances, the monetary policy of the National Bank will be conducted primarily to maintain price stability.
The monetary policy target for 2022 is to keep the average inflation rate within 12 percent.
The National Bank is ready to use all monetary policy instruments and necessary resources to minimize external economic shocks, contain monetary risks of inflation and ensure stability of the banking system.
«Taking into account the prerequisites of the external environment and internal economic conditions, the National Bank has decided to increase the discount rate. If necessary, the National Bank will make additional adjustments to the ongoing monetary policy. The National Bank evaluates external and internal factors influencing inflation on an ongoing basis and, depending on the economic situation, will take appropriate monetary measures,» the National Bank concluded.
The next meeting of the Board of the National Bank on the size of the discount rate will be held on April 25, 2022. But if necessary, an unscheduled meeting will be held.
Earlier, the national banks of Kyrgyzstan’s closes neighbors also raised the size of their discount rates. Belarus increased the rate to 12 percent, Kazakhstan — to 13.5 percent and Russia to a record 20 percent.
