The central bank of the Kyrgyz left its policy rate steady at 6.0 percent, saying the risk of inflation remains low so it's decision would provide further help in stimulating the economy.
The National Bank of the Kyrgyz Republic (NBKR) added that previous measures in monetary policy were continuing to reduce inflation. The NBKR has cut its rate by 400 basis points this year and reduced its by a net 50 points last year following both increases and decreases of the rate.
Inflation in Kyrgyzstan eased to 1.2 percent in July from 1.3 percent in June and as of Aug. 19 the inflation rate fell further to 0.5 percent due to due to lower prices of food and commodities in light of higher grain production in Kazakhstan and Russia and other food markets.
In addition, relatively low domestic demand continues to have a dampening impact on consumer prices, added the central bank, which targets inflation of 5-7 percent.
The economy is continuing to adjust in a "positive way," the central bank said, adding that in the first seven months of the year Gross Domestic Product was down 1.2 percent while it declined by 2.3 percent in the first half of the year, mainly due to lower output at the Kumtor gold mine.
Excluding the Kumtor mine, Kyrgyzstan's economic output grew by 1.6 percent.
Last month the International Monetary Fund said pressures on Kyrgyzstan's economy were beginning to moderate after a difficult start to the year and growth this year is expected to reach 2.2 percent while inflation will remain below 3.5 percent.
In the foreign exchange market, the NBKR said there was a slight excess demand for foreign currency in some periods in August, with the exchange rate of the som up by 9.6 percent since the beginning of the year.
During the last month the som weakened though its exchange rate rose in the first seven months of the year and was trading at 68.8 to the U.S. dollar today.
www.CentralBankNews.info
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