Uzbekistan holds policy rate at 14% as inflation cools

Uzbekistan has kept its policy rate at the current 14%, with falling inflation prompting the Central Bank to make borrowing conditions easier.

The regulator’s 16 September decision leaves the benchmark unchanged as annual inflation slowed to 6.2% in August. Core inflation was around 5.5%, while households’ and businesses’ inflation expectations also declined, according to the bank’s statement.

The Central Bank highlighted the liberalisation of regulated prices. Those adjustments can raise businesses’ costs and feed through into other goods and services, prolonging inflation beyond the initial increase.

It said that restrictive monetary conditions are still needed to keep inflation on track to reach the 5% target by the end of 2027. A stronger real effective exchange rate has helped moderate imported price pressure but has not removed the domestic risks.

The next policy meeting is scheduled for 28 October, although that is the next review date, rather than a commitment to lower rates.

Read more: Uzbekistan’s household debt load surges past «alarming» levels — Central Bank

Why policy rate stays high

The obstacle is the risk of renewed price pressure. Strong consumer spending and investment demand, alongside global food and energy costs, leave the regulator wary of cutting too soon.

For borrowers, the immediate consequence is that there is no benchmark cut to ease financing conditions. The policy rate influences bank funding and lending but is not the rate customers automatically pay on mortgages or consumer loans.

For savers, the bank’s stated aim remains to support positive real returns on soum-denominated savings. That means encouraging deposits to retain their purchasing power, although an individual saver’s return depends on the product and subsequent inflation.

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