Uzbekistan raises refinancing rate amid growing inflation

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TASHKENT (TCA) — Uzbekistan’s Central Bank has raised the refinancing rate to 14 percent per annum starting from June 28. The decision was due to the increasing inflation in the country and the need to limit the increased risk of further inflation, the Jahon information agency reports.

Along with seasonal fluctuations and supply factors, the inflation level was influenced by monetary factors such as the accelerating growth of lending to the economy and the devaluation of the national currency compared to last year, the Central Bank said.

In this situation, the effective interest rates lead to higher speculative demand for credit resources and the emergence of inflationary spirals.

Under these conditions, the Central Bank decided to raise the refinancing rate as an effective anti-inflationary measure aimed at: limiting the influence of monetary factors on the growth of the price level and inflation risks and keeping inflation within the target parameters; ensuring positive real interest rates and balanced conditions of lending to the real sector of the economy; creating preconditions for transition to the market formation of exchange rate; formation of favorable economic conditions for the development of entrepreneurship by ensuring price stability and low inflation expectations, stimulating investment in the medium and long term.

The Central Bank said it will continue its work to prevent the growth of prices, adding that the refinancing rate will be revised downward as prices in the consumer market are stabilized and inflationary risks reduced.

Sergey Kwan

TCA