- Decision
- Maintain
- Rate change
- 0 bps
- discount rate
- 12%
The National Bank of the Kyrgyz Republic kept its key rate at 12.00%, effective July 28, 2026, judging that tightened monetary conditions remain necessary to contain inflation pressures driven by external shocks and strong domestic demand. Over the past year, it raised the rate from 9.25% in July 2025 to 12.00% by February 2026, including a 100 bp increase in February. The central bank said interbank money and foreign exchange markets remain stable, short-term money market rates are close to the key rate, and excess liquidity in commercial banks is being actively managed with its monetary instruments. Inflation since the start of 2026 stood at 6.5%, or 11.3% year on year as of July 17, with food and fuel prices showing notable increases and services prices staying elevated, while real GDP grew 11.9% in the first half of 2026 amid rising real household incomes and strong investment activity, mainly in construction. The central bank said its measures are expected to support savings, preserve the purchasing power of the national currency and create conditions to slow inflation to the 5-7% target range over the medium term. It cited volatile global food prices, risks of oil product supply disruptions through the Strait of Hormuz and heightened geopolitical tensions in the Middle East as key external inflation drivers, and said it will continue assessing external and domestic factors and respond promptly if risks to price stability emerge.
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.