Uzbekistan’s Central Bank Keeps Key Interest Rate at 14 Percent

One of Uzbekistan’s key monetary policy indicators has remained unchanged. At its meeting on November 4, 2026, the Board of the Central Bank decided to keep the key interest rate at 14 percent per annum.

The decision indicates that the economic conditions are not yet sufficiently favourable for a reduction in interest rates. Although some inflation indicators remain relatively stable, domestic demand and external economic factors continue to pose risks of further price increases.

Inflation could rise to 7 percent

According to the Central Bank’s previous forecast, inflation was expected to reach 6.5 percent by the end of 2026. The latest projections have revised this figure upwards to 7 percent.

The revision is primarily linked to increases in regulated prices. In particular, higher tariffs for hot water and heating, as well as rising prices for liquefied petroleum gas (propane) for households, have contributed to the revised inflation outlook.

Central Bank representatives explained that the increase in heating tariffs had already been included in the initial calculations. However, the actual tariff increases turned out to be slightly higher than anticipated. As a result, the annual inflation forecast was revised.

A 2.5-fold increase in propane prices for households was also identified as one of the factors affecting the overall price level.

How much did prices increase in September?

According to the Central Bank, annual inflation stood at 6.4 percent in September 2026, slightly above the August figure.

Rising prices for fruit and vegetables, fuel, and certain services contributed to inflation. Annual inflation in the services sector reached 7 percent, while core inflation stood at 5.5 percent.

Another important indicator is the inflation expectations of households and businesses. In September, households expected prices to increase by 8.7 percent over the following 12 months, while businesses anticipated an increase of 9.2 percent.

This means that while official annual inflation stood at 6.4 percent, households and businesses expected prices to rise at a faster pace in the coming period.

Why did the Central Bank not cut the key rate?

Understanding the Central Bank’s decision requires looking at two fundamental economic processes: supply and demand.

On the one hand, rising household incomes, investment activity and consumer spending are supporting economic growth. On the other hand, if domestic demand grows faster than the economy’s production capacity, it can put upward pressure on the prices of goods and services.

Volatility in global food and energy prices is another contributing factor. Changes in import costs, transportation expenses and production costs can also affect the domestic market.

Under these circumstances, the Central Bank opted to maintain a tight monetary policy rather than reduce the key interest rate.

Keeping the rate at 14 percent is intended to support the attractiveness of savings in the national currency and curb excessive demand in the economy.

The economy is growing rapidly, but inflation remains elevated

The Central Bank’s updated forecast also includes revised expectations for economic growth. Uzbekistan’s gross domestic product increased by 8.3 percent in January–September 2026.

Economic growth is expected to reach approximately 8 percent by the end of the year. Industry, construction, services, investment and the launch of new production facilities have been identified as the main drivers of this growth.

However, faster economic growth does not necessarily mean price stability. If demand exceeds the economy’s production capacity, stronger economic activity can also intensify inflationary pressures.

The Central Bank’s objective is to maintain price stability without significantly restricting economic growth.

Will inflation fall to 5 percent in 2027?

According to the regulator’s longer-term forecast, overall inflation is expected to decline to the target level of 5 percent by the end of 2027.

The Central Bank expects the impact of regulated price increases on inflation to be temporary and gradually weaken over time.

However, achieving this target will depend on domestic demand, energy prices, conditions in external markets and changes in inflation expectations.

The Central Bank’s next key interest rate decision is scheduled for December 16, 2026.

Author: Hasanboy OCHUN