Kyrgyzstan holds rate as inflation moving toward target

     Kyrgyzstan’s central bank left its benchmark discount rate steady at 4.25 percent, citing the positive dynamics of aggregate demand and low inflation risks from foreign markets, with inflation in the medium term expected to approach the bank’s target range of 5 – 7 percent.
     The decision to maintain the rate comes after the National Bank of the Kyrgyz Republic (NBKR) cut its rate twice this year, most recently in May, and seven times since March 2016. Since March 2016 the discount rate has been cut by 575 basis points.
     As in May, NBKR said it may consider changing the current direction of its monetary policy “in the case of risks in the internal and external environment.”
     The central bank said inflation as of June 14 rose to 0.9 percent as the prices of fruits and vegetables recovered, up from 0.1 percent in May following deflation in the previous three months.
     NBKR said it maintained its forecast for inflation to be 4.0 percent year-on-year at the most by December and average 1.0 percent in the absence of shocks.
     Economic growth is also continuing, with real gross domestic product up 5.6 percent in the first 5 months of the year and up by 1.5 percent when output from the Kumtor gold mine is excluded.
     
     www.CentralBankNews.info