In 2025, economic activity developed at a higher-than-expected level, driven primarily by resilient aggregate demand factors. Inflation has continued on a downward trajectory, with the slowdown in goods price growth becoming broad-based.

Meanwhile, the relatively elevated level of services inflation as a result of demand factors, as well as price increases for certain food items, poses specific risks to a sustained decline in headline inflation. Under these conditions, maintaining the current tight stance of monetary policy will help ensure that inflation continues along a stable downward path.

If inflation and inflation expectations continue to decline steadily in the coming quarters, it may be possible to consider a reduction in the policy rate, while maintaining tight monetary conditions in view of changes in administered prices.

In December 2025, headline inflation evolved within the forecast range and declined to 7.3 percent year-on-year. The disinflation process was supported by a slowdown in core inflation amid tight monetary conditions, appreciation of the exchange rate and the impact of import prices. In particular, core inflation declined to 5.7 percent year-on-year in December.

Despite some moderation, services inflation remains above headline inflation due to demand-side factors. At the same time, inflation expectations in the economy halted their downward trend and recorded a slight increase in December.

These factors indicate the need to maintain tight monetary conditions for a longer period in order to bring inflation down sustainably to the target level.

According to updated forecasts, inflation is expected to be around 6.5 percent by the end of 2026.

High investment activity, fiscal spending, and rising remittances will continue to support income growth and stimulate consumer demand this year as well.

In addition, risks related to the supply of certain key food products and possible supply disruptions during the winter season may exert upward pressure on food and services prices in the coming months.

Despite continued uncertainty in the external environment, overall impacts are expected to remain moderate. Inflation in major trading partner countries has shifted to a declining trend, while global economic growth has exceeded expectations.

High growth in precious metals prices is projected to continue to account for a significant share of export receipts and budget revenues.

In the domestic foreign exchange market, foreign currency supply supported by export revenue, external borrowing, and remittances contributed to a 6.9 percent appreciation of the soum in 2025. This helped reduce imported inflation pressures and the level of dollarization. In addition, it lowered external debt servicing costs. In the coming months, it is expected that external conditions will stay relatively favorable and the dynamics of the real effective exchange rate will form at a balanced level.

Against the backdrop of current economic and investment activity, economic growth by year-end is expected to be around 6.5–7 percent.

Amid the persistence of excess liquidity in the banking system, liquidity absorption operations have intensified to ensure that money market rates remain close to the policy rate, at around 13.5–13.8 percent. As a result, positive real interest rates continue to encourage savings in the national currency and remain a tightening factor for monetary conditions.

Given strong aggregate demand factors, particularly fiscal stimulus and high growth in retail lending maintaining the policy rate at its current tight level will help contain inflationary risks.

The Central Bank will continue to closely monitor inflation dynamics, inflation expectations, aggregate demand, and external risks.

The Central Bank’s monetary policy will remain focused on reducing inflation to the 5 percent medium-term target, ensuring macroeconomic stability, and preserving the purchasing power of the population.

 The next meeting of the Central Bank Board to review the policy rate is scheduled for 18 March 2026.

Source: Press release of the Central Bank of the Republic of Uzbekistan