The Board of the National Bank of Kyrgyzstan decided to keep the discount (key) rate at 9 percent. The decision comes into force today, October 29. Deputy Head of the National Bank of the Kyrgyz Republic Azat Kozubekov said at a press conference in Bishkek.
According to him, inflation remains below the medium-term target of 5-7 percent. In October 2024, the annual inflation rate was 4.6 percent, down from 7.3 percent in December 2023. In general, the adopted monetary policy measures largely contribute to maintaining inflation at moderate values.
The annual growth of food prices in the inflation structure reached 2.4 percent, non-food products — 4.1 percent, services — 8.4 percent. The increase in the cost of non-food products is slowing down, but there has been some acceleration in prices for paid services in recent months.
The country’s economy continues to grow at a high rate due to the expansion of investment and consumer demand of economic entities.
The monetary environment remains stable. The short-term segment of the money market demonstrated a decrease in rates. The dynamics of rates on short-term borrowings on the interbank credit resources market remained within the interest rate collar established by the National Bank.
The banking sector is characterized by stable indicators and has sufficient liquidity. The gradual growth of lending continues, including for consumer purposes of the population and financing of trade and agriculture. The domestic foreign exchange market is relatively stable — the exchange rate remains flexible as a result of the market formation of demand and supply of foreign currency. In certain periods, in order to smooth out sharp changes in the exchange rate, the National Bank conducts currency interventions in the interbank currency market.
External conditions are ambiguous and are still associated with the nature of the geopolitical situation and the price situation in the world food and raw materials markets. After a long period of decline, world prices in food markets have shown a gradual increase in recent months. In some countries — trading partners of the Kyrgyz Republic — inflationary processes continue to develop at a relatively high level.
Despite the systematic slowdown in the domestic inflation indicator, in the short term, pro-inflationary risks persist as before. An assessment of the trends of external and internal inflation factors indicates the formation of an annual inflation indicator by the end of 2024 within the medium-term target indicator of 5-7 percent.
In these conditions, taking into account the assessment of inflation factors in the short and medium term, it seems necessary to keep the discount rate at 9 percent. The decision taken will contribute to maintaining price stability in the republic and creating conditions for ensuring macroeconomic sustainability.
The National Bank of the Kyrgyz Republic continues to assess the emerging external and internal economic conditions and, taking into account the remaining risks in the external environment, adheres to a balanced approach in conducting monetary policy. In the event of any risks, the National Bank does not rule out the possibility of making additional adjustments to the monetary policy.
The next scheduled meeting of the Board of the National Bank on the issue of the size of the discount rate will be held on November 25.
