The central bank of Kyrgyzstan cut its policy rate by a further 200 basis points to 6.00 percent to stimulate economic activity at a time of low inflationary pressures and weak economic data.
The National Bank of the Kyrgyz Republic (NBKR) has now cut its rate by 400 points this year following a similar-sized reduction in March. In 2015 the central bank cut its rate by a net 50 basis points following increases and decreases.
The NBKR said it would continued to assess external and internal factors that influence inflation in an effort to keep inflation within the 5-7 percent inflation target.
Kyrgyzstan's inflation rate dropped to minus 0.2 percent as of May 20, up from minus 0.6 percent in April but down from 0.5 percent in March and 3.4 percent as the start of the year.
"Results of previously taken monetary policy measures are seen in decreasing inflation in the country," the central bank said, adding lower food prices and weak domestic demand supported the fall.
It added that weak demand and stable food prices worldwide would contribute to slower growth in consumer prices while positive growth in domestic agricultural production would support this.
In March the central bank forecast a "moderate increase in prices for 2016," with inflation close to its target by the end of the year. It did not reiterate that forecast today.
Weak external demand and lower domestic consumption and investment also led to a 4.9 percent decline in economic output in the Kyrgyz Republic in the January - April period, the NBKR said. Excluding the output from the Kumtor gold mine, growth was zero.
Last year Kyrgyzstan's economy expanded by 3.5 percent and in December the International Monetary Fund forecast growth this year of 3.6 percent.
After falling sharply in 2014 and 2015, the exchange rate of the Kyrgyzstani som has appreciated since mid-February.
The som was trading at 68.3 to the U.S. dollar today, up 11 percent since the start of this year.
The National Bank of the Kyrgyz Republic issued the following statement: