Uzbekistan Policy Rate Outlook

The Central Bank of Uzbekistan maintained its 14% policy rate in June, but adopted a softer, more conditional tone regarding future easing. Analysts now expect rate cuts of 50-100bp later this summer or early autumn, supported by improving fiscal metrics.

Key Takeaways

• 1.The Central Bank of Uzbekistan (CBRU) held the policy rate at 14.00% but softened its policy language.
• 2.ING anticipates a potential 50-100bp rate cut in July or September.
• 3.Robust fiscal performance, with a narrowing deficit, provides the CBRU room for a cautious easing cycle.

Table of Contents

• Still on hold, but the tone softened
• CBRU holds the rate, dismissing the drop in CPI
• Why the CBRU chose to hold
• CPI precursors do not provide a strong directional signal
• Why we still think a cut could be close
• Fiscal balance continues to improve despite elevated spending
• Sustainable outperformance of bank funding over lending points to a sufficiently tight monetary policy stance
• Uzbekistan has the highest real policy rate in CIS-4 now
• What to watch next

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