Tashkent, Uzbekistan (UzDaily.com) — At the meeting on 31 October 2024, the Board of the Central Bank decided to keep the policy rate unchanged at 13.5 percent per annum.

Under the influence of strong consumer and investment activity as well as shifts in the supply of certain types of goods and services, upward pressure on inflation persists in the economy.

In order to ensure a steady decline in inflation and to achieve the 5% target in the medium term, it is necessary to maintain relatively tight monetary conditions.

Taking into account the macroeconomic forecasts and expectations on inflation factors, the Board of the Central Bank decided to keep the policy rate unchanged at 13.5% per annum.

In September, annual headline inflation amounted to 10.5%, flat in the last quarter. Due to strong consumer demand, pass-through effects of liberalization of fuel price and tariffs to services and a price increase in some food products, core inflation shifted to an upward trend and amounted to 7.1% in September year-on-year.

Average prices for fruits and vegetables continue decreasing, thus contributing to a deceleration of the headline inflation. According to weekly data in October, consumer prices remained relatively stable, and monthly dynamics was below the indicators of the corresponding period of the previous year.

The difference of the inflation expectations of the households and businesses from the actual and projected inflation rate remain high. According to the results of the September survey inflation expectations of the households amounted to 13.3%, while those of business entities were 12.6%.

In the last quarter of this year under the influence of relatively tight monetary conditions, inflationary pressures are expected to somewhat decrease, and headline inflation is projected to be around 9.5% by the end of this year.

In January-September, the real GDP growth amounted to 6.6% owing to positive dynamics observed in all major sectors of the economy. At that, strong investment activity remains one of the key drivers of economic growth.

Higher growth rate in cross-border remittances compared to the previous year contributes to an increase in household incomes. Rising average wages and real incomes in the economy support consumer activity. In particular, robust expansion in services and retail trade indicates strong consumer demand.

Given the current economic trends, the real GDP is projected to grow by about 6.0-6.5% in 2024.

Money market interest rates and yields on government securities reflect the continued relatively tight monetary conditions. High real interest rates in the banking system are further increasing saving activity of the population. Moderation of credit growth and higher deposit growth will allow to balance aggregate demand and mitigate monetary effects on inflation.

However, in the coming quarters there may be inflationary risks associated with the supply of energy resources and short-term fluctuations in their prices, disruptions in the supply of certain goods, persistence of rather high prices for services.

Under any circumstance, the Central Bank will continue implementing monetary policy aimed at achieving the inflation target of 5%, with special emphasis on the balance of supply and demand in the economy, inflation expectations and the pace of structural reforms.

The next meeting of the Central Bank’s Board to review the policy rate is scheduled for 12 December 2024.