TASHKENT

Uzbekistan’s central bank kept its main rate unchanged at 14 percent on Thursday to reduce annual inflation to 10 percent by the end of the year amid accelerating economic growth and inflationary factors.

Other reasons for the bank’s decision were the persistence of factors that increased prices in the economy and uncertainty associated with the degree of their influence, as well as a long-term inflation target of 5 percent.

An acceleration of economic activity has continued in the first eight months of this year, and in many sectors of the economy, growth rates reached pre-pandemic levels. In the first nine months of 2021, real gross domestic product (GDP) grew 6.9 percent year-on-year.

The industrial sector grew by 9 percent, returning to the pre-pandemic growth rate, while agriculture expanded by 4.2 percent and construction – by 4.5 percent.

The regulator said that investments in fixed assets increased by 5 percent, the income of the population in real terms rose by 10.4 percent in January-September.

The annual inflation rate reached 10.8 percent as of October 1, which is slightly higher than the forecast in the central bank’s baseline scenario.

“The main driver determining the dynamics of general inflation this year was a price rise for food products and it made an increasing contribution to annual inflation in the amount of 6.1 percentage points,” the bank said.

Earlier this year, the bank said it would closely monitor inflationary factors and potential risks coming from external and internal sources and would take appropriate measures to eliminate them.

Policymakers have kept the key rate unchanged since September last year. Uzbekistan forecasts 10 percent inflation this year, a rate the government wants to halve to 5 percent by 2023. As well as bringing inflation down, it is hoping to significantly boost economic growth.

Earlier this year, the central bank said real GDP growth in 2021 would be 1.0-1.3 percent higher than the initial forecast that had been made in the first quarter and was expected to be in the range of 5.8-6.8 percent. President Shavkat Mirziyoyev urged his ministers to find ways to spur growth to 6 percent this year,  a rate that exceeds most economists’ forecasts.