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National Bank leaves bank rate unchanged – 5 percent

The Board of the National Bank of Kyrgyzstan on February 27 decided to retain the size of the bank rate of 5 percent, its deputy chairman Nurbek Zhenish said today at a press conference.

It was noted that the decision was made on the basis of social and economic development of the country in February 2017. It is noted that inflation dynamics in Kyrgyzstan now is moderate. High offer of foodstuffs for 2016 put pressure on domestic prices, reducing them.

Since the beginning of 2017, food prices turned positive on the background of recovery of domestic demand. At the same time, there is slowing of inflation in relation to the goods included in the non-food group.

In February, inflation in Kyrgyzstan comprised 1.2 percent.

The National Bank of the KR believes that there is a restoration of economic activity against the backdrop of recovery of domestic consumption in the country now. Positive indicators of production in the country’s agriculture and moderate growth in the trade sector have caused real GDP growth at 7.9 percent in January.

«According to estimates of the National Bank, while maintaining the current factors until the end of the year, GDP growth will continue and support moderate inflation in the future. At the same time, the domestic currency market remains stable. Since the beginning of the year (as of February 27), the strengthening of KGS was 0.2 percent. Foreign exchange interventions are being carried out only in order to smooth short-term exchange rate fluctuations," Nurbek Zhenish said.

According to the forecast of the National Bank, in 2017 the value of inflation will be closer to the target of 5–7 percent.

Under these conditions and at low risk of inflation, the rate of the National Bank of 5 percent will consolidate the trend of economic recovery, Nurbek Zhenish said.

The next meeting of the Board of the National Bank of the Kyrgyz Republic on the bank rate will be held on March 27.