The central bank cut the key rate to 16 percent

At a meeting on June 9, the central bank decided to reduce the base rate by 1 percentage point to 16 percent per annum.

The main theses of the release on the reduction of the base rate:

The current reduction in the base rate is aimed at neutralizing the additional burden on external risks, while maintaining "tight" monetary conditions aimed at curbing inflationary risks.

The exchange rate of the soum against the US dollar reached its highest level in the first half of March 2022, depreciating by 6.8% compared to the beginning of the year, and has strengthened by 5.1% since the second half of March. As a result, the soum has depreciated by 1.6 percent since the beginning of the year.

In April-May, the Central Bank purchased $ 523 million in foreign exchange reserves in the domestic foreign exchange market to prevent the soum from depreciating sharply in the short term.

Emerging inflationary processes are more dependent on supply factors, reflecting the negative impact of the current geopolitical situation in the region on supply, transport and logistics processes.

Taking into account the expected tariff liberalization, the inflation forecast for the current year was left unchanged at 12-14%.

Exchange rate stability, in turn, will help mitigate the effects of "import inflation" on prices.