Central Bank introduces base rate and interest rate corridor

From January 1, 2020, the Central Bank of Uzbekistan introduces the base rate and the interest rate corridor (IRC) for monetary operations, the regulator said.

The base interest rate is set at the current refinancing rate (16%), the IRC is at ± 1 percentage point.

At the same time, the CB refinancing rate remains valid in the cases described in the legislation, as well as in other cases, its amount is equal to the amount of the base rate.

In order to prevent sharp fluctuations in interest rates in the money market, to form them within the established IRC or near the level of the main interest rate, the Central Bank uses the following types of monetary operations (instruments):

•  One-day (overnight) currency swaps and permanent access repos are provided at fixed interest rates and determine the upper limit of the interest corridor (base rate plus 1 percentage point);
•  one-day (overnight) deposits of constant access are provided at fixed interest rates and determine the lower limit of the IRC (base rate minus 1 percentage point);
•  currency swap auctions, repos and deposit auctions for up to 2 weeks, the interest rates for which are formed around the level of the Central Bank’s base rate;
•  placement of short-term (3- and 6-month) bonds of the Central Bank among commercial banks through holding auctions to regulate the structural liquidity surplus in the banking system and form a base of collateral for liquidity provision operations for commercial banks.

Information on currency swap auctions, repos and deposit auctions will be regularly published on the official website of the Central Bank.