Starting from June 28, 2017, the Central Bank of Uzbekistan (CBU) will raise the interest rate by 5 percentage points to 14% per annum, In a statement, the CBU announced.
The Board of the CBU held a meeting and discussed the effectiveness of monetary policy measures to ensure the stability of consumer prices.
This decision was made due to high levels of inflation and is aimed at countering the increased inflationary pressures.
The CBU notes that the high levels of lending to the economy and devaluation of the national currency to the previous year, as well as seasonal fluctuations and supply factors have influenced the inflation rate in Uzbekistan.
"In the current situation, the actual interest rate has lead to an increase in the speculative demand for credit resources and the emergence of inflationary spirals," the regulator added.
The CBU notes that the increase aims at limiting the influence of monetary factors on the consumer prices rise and inflationary pressures. Also this decision will allow to maintain the target level of inflation and will also provide positive real interest rates and balanced terms for lending to the real sector.
The CBU emphasizes that the measure will create the necessary prerequisites and mitigate the ongoing transition to market formation of the exchange rate.
The decision is also expected to create favorable conditions for the development of entrepreneurial activity by ensuring prices stability and low inflation expectations, which will stimulate investments in the medium and long term.
The CBU said that it will continue to take targeted measures to prevent price rises and create stable low inflation expectations in the economy, and emphasized that the interest rate will be lowered as consumer prices stabilize and inflation risks are reduced.
According to statistics, inflation in 2016 was 5.7% compared to 5.6% in 2015. This year, the inflation target is within 5.7-6.7%.