- Decision
- Raise
- Rate change
- 25 bps
- discount rate
- 9.25%
The Board of the National Bank of the Kyrgyz Republic on 28 July 2025 raised the discount (key) rate by 25 bp to 9.25%, effective 29 July, citing persistent but elevated inflation—driven by seasonal food costs, a low base and planned electricity-tariff increases—alongside buoyant domestic demand and strong economic activity. After holding the rate at 9.00 % through four meetings since January, the central bank now judges a modest tightening necessary. It said its policy mix is keeping interbank money-market rates within the desired range, with ample som liquidity in the banking system managed through monetary operations to maintain balanced money supply. Consumer prices have risen 4.6 % year-to-date and 8.7 % y/y, compared with the 5–7 % medium-term target corridor, while real GDP expanded 11.7 % y/y in January–June, supported by services, construction and industry, rising household incomes and higher investment. The foreign-exchange market remains stable, with exchange-rate flexibility under balanced FX demand and supply, and banks continue to hold excess liquidity. The central bank highlighted heightened global uncertainty from geopolitical tensions, shifts in world trade policy and volatile food and commodity prices, and said it will maintain a balanced, forward-looking approach and stands ready to adjust policy should risks to price stability intensify.
Rate evolution
The National Bank of the Kyrgyz Republic tightened policy by 275 basis points over the period, lifting the policy rate from 9.25% in July 2025 to 12.00% in February 2026, after an August pause and a January hold, and then kept it unchanged through August, most recently on August 24 with effect from August 25. Early decisions were driven by inflation above the 5-7% target, initially tied to seasonal food pressures and electricity tariff revisions but reinforced by strong growth, domestic demand and investment, while the Bank consistently flagged elevated external uncertainty from geopolitical tensions and volatile food prices.
It later stressed a shift in price pressures toward non-food goods and services, imported fuel and energy costs and secondary effects, and by February a stronger fiscal impulse, wider output gap and resilient consumer demand, which prompted tightening. In July, the Bank said restrictive monetary conditions remained necessary as inflation since the start of 2026 had reached 6.5%, or 11.3% in annual terms as of July 17, with food and fuel prices rising amid geopolitical tensions, volatile global commodity markets and risks to oil product supplies through the Strait of Hormuz. In August, it noted that consumer prices had risen 7.3% since the start of 2026 and annual inflation stood at 11.7% as of August 14, as higher fuel costs fed into transport and production expenses, global food price volatility lifted food prices, and domestic factors drove an 11.1% increase in service prices. With real gross domestic product growth at 11.1% in January-July, supported by construction investment and consumption, rising incomes and expanding credit, the Bank judged that restrictive conditions and active regulation of excess banking system liquidity remained necessary to limit secondary effects from external inflation and said it could adjust policy if risks to price stability emerge.