The Central Bank of Uzbekistan has raised its end-2026 inflation forecast to 7% from 6.5% and signalled that tight monetary conditions will remain in place through 2027, according to a draft concept paper on monetary policy for 2027-2029 that is open for public comment until Nov. 16.
The bank said the revision reflects planned increases in regulated tariffs for household liquefied gas, hot water and district heating before the end of 2026, which it estimates will add about 0.8 percentage points to inflation directly.
Annual inflation stood at 6.4% in September, while core inflation, which excludes goods and services with seasonal or regulated prices, was 5.5%. The bank said the slowdown in headline inflation has not been matched by an equally durable easing across a broad range of prices.
In the baseline scenario, headline inflation reaches the 5% target in the second half of 2027, and core inflation falls to 4-5% over the year. The bank said the fading effect of the 2026 tariff increases alone could cut annual inflation by 0.8-0.9 percentage points.
“Decisions on easing monetary conditions will depend on inflation dynamics and the macroeconomic situation,” the draft says. The bank tied further cuts in its rate to a sustained slowdown in inflation and lower inflation expectations, not to a specific date. If inflationary pressure is stronger than expected, tight conditions could last longer.
The bank kept its rate at 14% throughout 2026. By September, the gap between the real rate and its estimated neutral level had widened to 3.1 percentage points, with the neutral rate averaging 4-5%, it said.
High rates are shaping behavior. In August, real rates on term soum deposits were 7.9% for households and 5.3% for corporate clients, while real loan rates were 10.4% and 11.6%. Annual growth in outstanding local-currency loans slowed to 17.1% at the end of September, 5.2 percentage points lower than at the start of the year.
The bank raised its 2027 growth forecast to 7-7.5% from 6-7%. It lifted its investment growth forecast to 12-14% for 2027 from 7-10%, and to 10-12% for 2028 from 7-10%.
It expects fiscal policy to become less stimulative. The overall deficit is projected to stay at about 3% of GDP in 2027-2029, while the consolidated budget’s share of spending in GDP is forecast to fall from 29% in 2026 to 26% in 2028.
The draft lists four risks: a sharp depreciation of trading partners’ currencies, a steep rise in global oil prices, higher food prices, and faster domestic lending. The baseline assumes Brent crude will average about $96 a barrel in 2026 and $84 in 2027, citing the U.S. Energy Information Administration.
“Monetary policy supports the sustainability of economic growth, but cannot on its own increase the economy’s production potential,” the draft says.
Cross-border remittances to Uzbekistan totaled $15.2 billion in the first nine months of 2026, up 8.9% from a year earlier. Real household incomes rose 8.1% in January-September, and home sales rose 17%.
