Kyrgyzstan holds rate, plans to maintain current stance

      The central bank of Kyrgyzstan left its policy rate, the discount rate, steady at 4.75 percent and confirmed that it plans to keep the current direction of monetary policy in the forthcoming period in the absence of external shocks.
       Last month the National Bank of the Kyrgyz Republic (NBKR) cut its rate for the first time since December 2016 and said it intended to stick to the current direction of monetary policy for the time being, provided there are no external shocks.
       Commenting on its decision, the central bank said it was taking into account the external risks and the domestic trends where the inflationary environment is low and economy is benefitting from the continued inflow of remittances and higher wages that are stimulating private consumption.
       Inflation in Kyrgyzstan decelerated to 1.2 percent in May from 2.0 percent in April and fell further to 1.0 percent as of June 15 as food prices continued to decline, the central bank said.
      The NBKR confirmed it expects inflation to remain below the target of 5 -7 percent in the medium term as long as the favorable situation in domestic and foreign markets continues.
      The combination of growing demand and soft monetary conditions should help inflation recover.
      Economic activity in the Kyrgyz Republic has slowed somewhat, the NBKR said, adding Gross Domestic Product in the January - May period grew 0.7 percent. Excluding output from the Kumtor gold mine, GDP grew 2.5 percent.
      In the first quarter of this year GDP grew an annual 1.3 percent, down from 4.5 percent in the fourth quarter of last year.
      The central bank expects the favorable economic situation to continue this year, supported by growth in Kyrgyzstan's trading partners and good private consumption.
      The foreign exchange market has remained stable, continuing the situation seen since April 2016.
      Against the U.S. dollar, which has shown widespread strength in recent months, the Kyrgyzstani som has appreciated 1 percent this year and was trading at 68.24 to the dollar today.

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