Uzbekistan's central bank kept its base rate steady at 14.0 percent, unchanged since September last year, saying this was to support the economic recovery and maintain the slowing dynamics of inflation and inflation expectations against the backdrop of the risk of rising global food prices.
The Central Bank of the Republic of Uzbekistan (CBU) lowered its base rate twice last year (April and September) by a total of 200 basis points to support economic activity during the COVID-19 pandemic and since then inflation has trended lower, from over 14 percent mid-2020 to 10.9 percent in March.
The Central Bank of the Republic of Uzbekistan (CBU) lowered its base rate twice last year (April and September) by a total of 200 basis points to support economic activity during the COVID-19 pandemic and since then inflation has trended lower, from over 14 percent mid-2020 to 10.9 percent in March.
However, CBU noted food prices in March rose an annual 13.8 percent, and carries a 5.8 percentage point impact on the headline rate, while the cost of non-food products and services rose 8.8 percent and 8.4 percent, respectively, while core inflation was 11.6 percent, showing a persistence of inflationary risks.
And while 12-month inflationary expectations have trended lower and are now 15.5 percent for the general population and 15.9 percent by businesses, CBU said they remain higher than actual inflation.
CBU maintained its forecast for inflation to end this year between 9.0 and 10.0 percent.
At the start of 2020, the central bank began transitioning to an inflation targeting regime, with the aim of lowering inflation to 10 percent in 2021 and then 5 percent in 2023.
And while 12-month inflationary expectations have trended lower and are now 15.5 percent for the general population and 15.9 percent by businesses, CBU said they remain higher than actual inflation.
CBU maintained its forecast for inflation to end this year between 9.0 and 10.0 percent.
At the start of 2020, the central bank began transitioning to an inflation targeting regime, with the aim of lowering inflation to 10 percent in 2021 and then 5 percent in 2023.
Economic activity in the former Soviet republic continued to recover in February and March after declining in January, with gross domestic product in the first quarter expanding an annual 3.0 percent, as industrial output rose 3.8 percent, agriculture by 3.1 percent, services by 5.8 percent and construction by 0.5 percent and retail turnover by 2.8 percent, the bank said.
The improvement in the global economy is also boosting exports from Uzbekistan, with exports, excluding gold and gas, up 25 percent from last year with exports of textiles up 38 percent, chemical products up 21 percent and non-ferrous metals up 58 percent.
CBU forecast real GDP growth this year of 4.5 to 5.5 percent, adding based on the first quarter, growth will be close to the upper limit of this forecast. In 2020 Uzbekistan's economy grew 1.6 percent.
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