National Bank of Kyrgyzstan kept interest rate at 13% – Reuters

The Board of Directors of the National Bank of Kyrgyzstan decided on January 30, 2023 to maintain the interest rate (key rate) at 13%. The decision comes into force on January 31, 2023. This is reported by the National Bank of the Kyrgyz Republic.
The maintenance of the key rate corresponds to the macroeconomic conditions of the country and reflects the policy of the National Bank in relation to the existing risks in the economy. The current monetary policy stance is aimed at limiting pro-inflationary factors in the economy of the Kyrgyz Republic.
Annual inflation will be 14.7% by the end of 2022. As of January 20, 2023, the price increase was 1.2%. In general, the dynamics of inflation are developed within the framework of the medium-term forecast, which makes it unnecessary to change the path of the discount rate. The stabilization of the situation in the global energy and food markets is expected to influence the slowdown in inflation in the second half of 2023. An additional internal source of pro-inflationary risks is the increase announced cost of administered prices (tariffs).
In the Kyrgyz Republic, -pandemic recovery of the economy has kept economic activity at a high level. According to preliminary data, real GDP growth in 2022 was 7.0%. This is largely due to growth in production volumes in the service, industrial, agricultural sectors and increased domestic demand. Domestic demand is also supported by the expansion of lending to the economy: according to preliminary data, at the end of 2022, interest in the bank loan portfolio was around 12%.
The situation on the money and money markets remains relatively stable thanks to the timely measures taken by the National Bank. Tactical monetary policy decisions are taken under the conditions of a significant increase in excess liquidity in the banking sector.
The prospects for economic development of the Kyrgyz Republic still largely depend on external economic factors, the dynamics of which are dominated by high uncertainty. Under these conditions, pro-inflationary risks remain. The cumulative effect of previously adopted monetary policy measures will help mitigate potential inflation risks. The further direction of monetary policy will be formed taking into account the influence of the above factors and risks on the country’s economic process.
The National Bank is constantly monitoring the development of the situation and, if necessary, will use additional tools and take appropriate measures to achieve the objective of ensuring price stability in the medium term.
The next scheduled meeting of the Board of the National Bank of the Kyrgyz Republic on the issue of the interest rate will be held on February 27, 2023.