Kyrgyzstan's central bank cut its discount rate by another 50 basis points to 5.0 percent and said it intends to continue with the current direction of monetary policy to help stimulate the economy in the absence of external shocks
The National Bank of the Kyrgyz Republic (NBKR) has now cut its rate by 500 basis points this year and said it considered its appropriate to lower the discount rate based on the current forecasts for inflation that sees it to close to zero in coming months.
As of Dec. 16, the central bank said consumer prices were down by an annual 1.1 percent, with non-food inflation down by 4.0 percent while food prices helped slow the decline.
Consumer prices in Kyrgyzstan rose in November from October but the inflation rate remained negative for the third consecutive month. The inflation rate in November was minus 0.5 percent, down from minus 0.2 percent in October and minus 0.3 percent in September.
Earlier this month the International Monetary Fund (IMF) forecast that inflation this year would average 0.8 percent, down from 6.5 percent in 2015, before rising to 5.2 percent in both 2017 and 2018.
Kyrgyzstan's economy is expanding, with Gross Domestic Product up by 3.2 percent in the first 11 months of the year. Excluding output from the Kumtor gold mine, growth was 3.3 percent, with all major sectors showing growth, NBKR said.
The IMF forecasts 2016 growth of 2.6 percent, down from 3.5 percent last year, and easing further to 2.3 percent in 2017 before rising to 2.9 percent in 2018.
The central bank also said the domestic foreign exchange market remained stable and from the beginning of the year until Dec. 23 the som has appreciated 8.5 percent, with intervention in the foreign exchange market only to smooth out short-term fluctuations.
The som fell swiftly from early 2014 until December 2015 but from February to late July it has risen. Today the som was was trading at 69.4 to the U.S. dollar, up 9.4 percent this year.