Kyrgyzstan's central bank, one of only a handful of central banks to have raised rates this year, again left its rate steady to maintain stimulus of economic activity, adding the return of global economic growth to pre-crises levels is expected to take longer than previously expected.
The National Bank of the Kyrgyz Republic (NBKR) kept its discount rate at 5.0 percent, unchanged since it was raised in February by 75 basis points to dampen inflationary pressure.
The central bank said the country's economy was still largely influenced by external conditions and measures to counter the spread of the COVID-19 pandemic, which resulted in a sharp decline in the country's economy except for the agricultural sector and the Kumtor gold mine.
Economic activity in Kyrgyzstan remains in the negative zone and remittances from workers abroad are still below last year, reducing domestic consumption, NBKR said, adding inflation also remains in a downward trend amid disinflationary factors.
Kyrgyzstan's inflation rate decelerated to 5.3 percent in July and to 4.9 percent as of Aug. 14 after reaching a peak of 8.6 percent in April due to weak domestic demand, high supply of seasonal agricultural goods and a stabilization of the som's exchange rate, the bank added.
NBKR expects inflation to average between 5.0 to 7.0 percent by the end of its year, in its target zone.
After plunging some 18 percent from mid-March to early April, the Kyrgyzstani som then rebounded by early June, helped by intervention by the central bank.
Since the start of this month the som has been more stable though it has still depreciated and was trading at 77.9 to the U.S. dollar today, up 9 percent since lows of just above 85 in early April, but still down 10.5 percent since the start of this year.
NBKR is in the process of transitioning to an inflation targeting monetary framework.
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