“People got used to the fact that prices only grow” - Central Bank

The Central Bank of Uzbekistan intends to gain public confidence and reduce inflation rate as per the expectations of the population. This was announced at a press conference on monetary policy held on Tuesday under the chairmanship of Bekhzod Khamrayev, Director of the Monetary Policy Department of the Central Bank.

“Entrepreneurs and ordinary people already got used to the fact that prices only rise. If you pay attention to the exchange rate over the past 10 years, it has steadily increased, which means that prices have also gradually escalated. That’s why such a concept has been formed – that is very bad,” he said.

According to Mr. Khamraev, at the beginning of this year, the Central Bank introduced a practice of regular price monitoring to detect inflation risks at the early stages. 700 individuals and 300 legal entities are participating in the survey.

“We started conducting surveys. Due to the fact that ensuring price stability in the domestic market is one of the priorities of the Central Bank (CB), we need to quickly monitor the dynamics of consumer prices in the areas. So that we make our assessments of what risks are expected and how pricing occurs,” the representative of the CB explained.

In the first or second half of 2019, the Central Bank plans to introduce a Forecasting and Policy Analysis System (FPAS). “Econometric models will be created that take into account all economic changes. To make it happen, we will attract foreign experts and send our employees for an internship,” he said.

The head of the department pointed out that since January 2018, there has been a steady decline in inflation.

“In January, inflation was at the level of 20.1%, in November – 16.6%. It is very important that core inflation is reduced from 14.1% to 10.5% in January-November 2018. Current inflation is at 16–17% - this is not a bad result. It is a one-time inflation, which appeared as a result of economic reforms and liberalization. So, it is not a chronic inflation which will lead to a further increase in prices,” the expert explained.

Next year, the Central Bank forecasts inflation at the level of 13.5–15.5%, in 2020 - 10–12% and in 2021 - below 10%. “As soon as the process of price liberalization is completed, we will have more opportunities to reduce inflation to unambiguous levels,” Mr. Khamrayev noted.