The Central Bank of Uzbekistan (CBU) on October 24 kept its key policy rate at 14% per annum, citing easing inflation but ongoing risks.

The regulator said it would maintain the existing benchmark due to “inflationary risks arising from external supply shocks as well as high services inflation that persists amid strong aggregate demand”.

Headline inflation fell to 8% y/y in September, falling 0.8 pecentage points from August, while core inflation eased to 7% y/y, helped by a stronger Uzbekistani som (UZS).

“The appreciation of the som is contributing to the slowdown of import inflation, stabilising the prices of non-food goods to some extent,” the CBU said.

Inflation expectations are declining but remain above current and forecast rates. The central bank revised its year-end inflation forecast to around 8%.

GDP growth is projected at a robust 7-7.5% by year-end, with rising household incomes and retail lending boosting demand, which could keep inflation pressures persistent.

Authorities also flagged potential pass-through effects from energy tariff liberalisation and supply-related issues for certain goods as ongoing risks to price stability.

The CBU stressed that tight monetary conditions are needed to reach the 5% inflation target in the medium term and confirmed its next policy meeting for December 11.

The last change to the policy rate came in March, when it was raised from 13.5% to the prevailing 14%.