The Board of the Central Bank of Uzbekistan on January 26 decided to keep the interest rate at 16% per annum, the Central Bank said. The decision was based on the need to keep anti-inflationary monetary policy course, keep positive real interest rates and cut inflation expectations.
Annual inflation in December 2018 was at 14.3%. The monthly increase in prices in this month was 2.1% versus 4.1% in the corresponding period of the previous year.
In addition, in the quarters II-IV of 2018, there was a decrease in quarterly inflation rate compared with the same period of 2017.
However, in Q4, inflationary pressure remained high, due to the influence of factors from both the demand and the expenses side.
The raise of the interest rate in September 2018, coupled with the strengthening of prudential supervision, contributed to the tightening of both price and non-price credit conditions, which ultimately normalized the growth rates of lending.
Also, there was barely any adjustment of prices related to the tax overhaul as of January 2019, which is mainly due to the fact that businesses have uncertainty about the impact of tax reform on their financial activities and production costs.
As a result, annual inflation (14.3%) was lower compared with the September forecast (16–17%).
According to provisional data, the economy grew by 5.1% last year.
In general, internal conditions remained favorable for investment, production and consumer activity in Q4.
