The central bank of the Kyrgyz Republic left its key discount rate at 5.0 percent, saying keeping the rate at this level will continue to stimulate economic activity in the absence of external and internal inflationary risks.
The National Bank of the Kyrgyz Republic (NBKR) has kept its rate steady since December 2016 when it last cut it as part of a 500-basis-point easing cycle that began in March 2016.
The central bank added its board had taken the decision on June 27 and its decision would take effect on June 28. The board was originally scheduled to meet June 26.
As of June 16, Kyrgyzstan's inflation rate rose to 4.4 percent and is expected to remain within the central bank's target range of 5 percent to 7 percent, NBKR said.
In May and April the inflation rate was steady at 3.8 and the central bank said the gradual recovery in demand is having an impact on inflation with a rise in prices for fruit, vegetables and services having the greatest impact on prices in June.
Between September and December 2016 Kyrgyzstan's inflation rate was negative.
The central bank also noted the positive economic trends, with growth up 6.8 percent in the January-May period on continued recovery in domestic consumption.
Excluding the Kumtor gold mine, Gross Domestic Product grew 2.9 percent, the NBKR said, adding output in the main sectors in the economy is growing, helped by the availability of credit, declining interest rates on loans in domestic and foreign currencies.
In the first quarter of this year GDP grew by an annual 7.8 percent, up from 3.8 percent in the fourth quarter of 2016 and 2.0 percent in the third. In the previous two quarters GDP was negative.
In April the International Monetary Fund forecast 2017 growth of 3.5 percent growth as external and internal demand continue to improve.
The domestic foreign exchange market remains stable, with the exchange rate of the som up by 0.9 percent between the start of this year and June 22, the central bank said, adding it didn't intervene in the foreign exchange market during the month of June.
The IMF has recommended the NBKR should only intervene to mitigate excessive volatility.
The som was trading at 68.86 to the U.S. dollar today, up 0.49 percent this year.
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