According to the statement of the regulator, the Board of the Central Bank of Uzbekistan adopted this decision at the session, which was dedicated to efficiency of measures on monetary-credit policy on ensuring stability of consumer prices.

The decision of the Central Bank was adopted in connection with accelerated inflation rate in past period and necessity to limit growing inflation risks.

Central Bank underlined that accelerated growth of crediting of economy and devaluation of national currency compared to last year along with fluctuations and supply factors have influenced the level of inflation in Uzbekistan.

“In the current situation, the current interest rate leads to the growth of speculative demand for credit resources and emergence of inflationary spirals,” the regulator said in a statement.

Central Bank noted that increase of the refinancing rate is aimed at limiting the influence of monetary factors on the growth of the price level and inflationary risks, keeping inflation within the target parameters.

The decision will also ensure positive real interest rates and balanced terms for lending to the real sector of the economy.

Central Bank emphasized that raising the refinancing rate will create the necessary prerequisites for the transition to a regime of market formation of the exchange rate.

The decision also creates favorable economic conditions for development of entrepreneurial activity by ensuring price stability and low inflation expectations, which will stimulate investment in the medium and long terms.

“Central Bank will continue its purposeful work in the future to prevent the growth of inflation level and formation of steadily low inflation expectations in the economy,” the regulator said.

Central Bank stated that the refinancing rate will be lowered after the prices in the consumer market stabilize and inflation risks are reduced.

According to official statistics, inflation rate in 2016 was 5.7% compared to 5.6% in 2015. This year, inflation rate is planned to be kept within 5.7-6.7%.

Last time, Central Bank of Uzbekistan changed the refinancing rate in January 2015. At that time, the regulator lowered the base rate from 10% to 9% APR. The last time the refinancing rate was set at 14% APR from 15 July 2006 to 31 December 2010.