- Decision
- Maintain
- Rate change
- 0 bps
- discount rate
- 12%
The Board of the National Bank of the Kyrgyz Republic left the discount (key) rate unchanged at 12.00 % with effect from 26 May 2026, arguing that maintaining tight monetary conditions is essential to dampen heightened external and domestic price pressures and steer inflation back to the 5-7 % medium-term target band. After a 100 bp hike to 12.00 % in February 2026 the rate has been on hold at both the April and May reviews. The central bank said money and foreign-exchange markets remain stable, with ample excess liquidity in the banking system being actively absorbed through its instruments and a relatively steady som helping to contain inflation expectations. Consumer prices rose by 4.7 % since the start of the year and by 10.9 % year on year as of 15 May, fuelled chiefly by higher food and service costs, forthcoming increases in electricity and utility tariffs, tax-related reforms and robust internal demand; real GDP grew 12.4 % in January–April, driven by services, industry and construction on the back of stronger consumption and investment. External risks remain elevated amid ongoing geopolitical tensions in the Middle East, volatile global food and energy prices and potential supply-chain disruptions. The central bank will continue to monitor inflation drivers and said it is ready to act promptly 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.