BAKU, Azerbaijan, August 1. The Central Bank of
Uzbekistan left its key interest rate unchanged at 14 percent on
July 29, citing rising inflation, strong domestic demand and
persistent external risks as reasons for maintaining tight monetary
policy.


This was reflected in a statement by the Central Bank of
Uzbekistan.


According to the regulator, the current monetary policy stance
remains sufficiently restrictive to bring inflation back toward the
bank's 5 percent medium-term target.


The central bank said one of the key factors behind the decision
was the recent acceleration in inflation. Annual inflation rose to
6.4 percent in June, driven by higher energy tariffs and the
liberalization of coal prices.


The regulator also warned that the effects of utility tariff
increases could spread to a broader range of goods and services
during the second half of the year, creating additional
inflationary pressure.


The central bank noted that strong economic activity also
influenced its decision. Uzbekistan's gross domestic product (GDP)
expanded by 8.5 percent in the first half of 2026, while robust
consumer spending and investment demand continued to support
economic growth but also contributed to price pressures.







The regulator further highlighted external risks, including
geopolitical tensions, the possibility of higher global commodity
and food prices, and the continuation of tight monetary policy in
major economies, all of which could increase inflationary pressures
and make external financing conditions more challenging.


The Central Bank maintained its end-2026 inflation forecast at
6.5 percent, adding that the current 14 percent policy rate would
help anchor inflation expectations and ensure a gradual return of
inflation toward its target. The regulator's next monetary policy
meeting is scheduled for Sept.16.


The central bank's assessment is consistent with the latest
data from Uzbekistan's National Statistics Committee, which
showed that the consumer price index (CPI) rose 0.6 percent in
June, bringing annual inflation to 6.4 percent and cumulative
inflation in January-June to 3.3 percent. Core inflation, which
excludes seasonal fruit and vegetable prices, stood at 6.9 percent
year on year.


According to the statistics committee, housing and utility
services remained the main drivers of inflation after revised
household tariffs took effect. Electricity prices increased 9.6
percent in June, while natural gas tariffs rose 10.7 percent.
Prices for coal, following market liberalization, more than doubled
and alone contributed 0.48 percentage points to monthly inflation.
Meanwhile, lower seasonal fruit and vegetable prices helped offset
part of the upward pressure on consumer prices.


According to Trend's analysis, the Central Bank's decision reflects
a cautious approach to balancing strong economic growth with
persistent inflationary pressures. Although GDP expanded by 8.5
percent in the first half of 2026, annual inflation accelerated to
6.4 percent in June, driven largely by regulated price increases
for electricity, natural gas and coal. At the same time, core
inflation remained higher at 6.9 percent, suggesting underlying
price pressures extend beyond seasonal factors. By maintaining the
policy rate at 14 percent while keeping its 6.5 percent year-end
inflation forecast unchanged, the regulator signaled that it
considers the current level of monetary tightening sufficient to
steer inflation gradually back toward its 5 percent target while
preserving economic momentum.