Tuesday, February 24, 2015

Kyrgyzstan maintains rate despite rising inflation

    The central bank of the Kyrgyz Republic maintained its policy rate at 11.0 percent, noting there are still pressures on domestic financial markets amid increased inflationary pressures.
    The National Bank of the Kyrgyz Republic, which has raised its rate by 500 basis points since July 2014, most recently by 50 points last month, added that the country's economy and its major trading partners continue to develop in an environment of "high uncertainty and vulnerability to shocks."
    The central bank also said it would continue to "take appropriate measures" to achieve a medium-term inflation rate of about 7 percent.
     The central bank said the inflation rate as of mid-February amounted to 10.9 percent, up from 10.4 percent according to preliminary data for mid-January and 10.5 percent in December.
     Kyrgyzstan's currency, the som, began depreciating in August 2014 and was trading at 61.18 to the U.S. dollar today, down 15.5 percent since then and 3.8 percent since the start of this year.
    On  Jan.30 the International Monetary Fund (IMF) said the slowdown in the economy of Kyrgyzstan, which borders Kazakhstan to the north and China to the east, would continue this year, as gold production was expected to drop and the economic crises in Russia would dampen remittances, trade and domestic demand.
    Economic growth in 2015 was likely to decelerate to 1.7 percent while inflation was expected to average about 10 percent, driven by the depreciation of the som. In 2014 Kyrgyzstan's Gross Domestic Product was estimated to have expanded by 3.6 percent, down from 10.5 percent in 2013.




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