On January 1, 2018, Uzbekistan will transition to the international method of calculating the inflation rates. It is one of the government’s steps of transitioning to the inflation targeting system, the first deputy chairman of the Central Bank (CB) Timur Ishmetov said yesterday at a meeting of the International Press Club.
"Regarding the inflation rate –before in the government, we had one figure, international financial institution, say IMF had another. This has created inconvenience, because when there is no clear data, it is difficult to take proper actions," he said.
He added that full transition to inflation-targeting is a medium-term issue. "Preconditions must be prepared. The first is an absolutely free market exchange rate. It is not possible to have an exchange rate which is set administratively and managed by the Central Bank, and at the same time ensure inflation targeting. We have already passed the first stage, at the final stage the CB’s participation will be minimized to interventions in case of heavy fluctuations, without affecting the dynamics itself. "
He added that the next two years there will be high upward pressure on inflation rates, due to, to less extent to stabilization and to a greater extent "to the previous soft monetary policy, which led to an increase in the money supply, high lending volumes." For this reason, we are now having high inflation rate.
He also noted that because of administrative regulation, ordinary people can’t always afford basic goods. "Price adjustment is inevitable, we have to undergo it once for all. I would even say: we are paying the price for previous wrong monetary policies."
The transition to market pricing is one of the first steps. Without this, all our liberalization reforms will be in vain, he stressed.
"We have no other way but to undergo painful but necessary reforms. For every single step, the government has a program of support for socially vulnerable people and some economy sectors. Inflation targeting is our ultimate goal which will be implemented in the medium term, and which will take time. But gradually we will achieve it,"- the first deputy chairman emphasized.
