On July 20, at a meeting, the Board of the Central Bank decided to keep the refinancing rate unchanged at 16% per annum. This is reported on the website of the regulator.
The decision was made against the background of the continuing need to strengthen the dynamics of growth in the shares and volumes of long-term savings resources of banks in the conditions of forming the prerequisites for reorienting the sources of their credit resources from public funds to traditional – market ones.
The inflationary trend was formed under the influence of rising market prices for food products and services, while regulated prices for services and non-food products had a restraining effect.
Annual inflation by the end of June was 13.6%. At the same time, annual inflation during the last 5 months was fixed at 13.5-13.7%.
When conducting monetary policy and shaping its conditions, the Central Bank will proceed from the task of reducing inflation to a single digit in 2021. At the same time, the CB retains the basic projected inflation trajectory, which assumes its value at the level of 10-12% in 2020.
A further decrease in the level of inflation causes the use of a restrained approach in making expenditures from centralized sources, including for crediting the economy.
The current realities of the economy of Uzbekistan are peculiar. Accumulated investment “hunger” over the years and deferred socio-economic costs, coupled with the economy liberalization, have generated additional demand for financial and investment resources.
In the period under review, the negative balance of foreign trade amounted to $2.8 billion and is expected to increase by the end of the year.
It is assumed that the deficit of the foreign trade balance will be covered by the net primary and secondary incomes of the current account, as well as the financial account. It will not create significant pressure on the soum exchange rate.
A significant increase in aggregate demand in the economy may contribute to a slight acceleration in real GDP growth in 2019, compared with the initial forecast.
Over the past period of July, the weighted average interest rate of the interbank market increased up to 15.4%.
In the first half of the year, the credit investments of commercial banks increased by 23.4% (by 38.6 trillion soums), and their annual growth rates accelerated to 52.8%, exceeding the forecast figures by more than 2 times.
