Relatively tight monetary conditions are leading to the gradual slowdown of inflationary pressures and inflation expectations. At the same time, a certain degree of inflationary risks persists in the economy due to stable aggregate consumer demand, supply factors, and high price dynamics in the services sector. This decision is aimed at achieving a stable disinflationary trajectory in the medium term.
The downward trend of inflation continued in November, reaching 7.5 percent annually. This was primarily driven by the slowdown in core inflation due to tight monetary conditions and the relative appreciation of the exchange rate. Specifically, in November, core inflation fell to 6.3 percent annually. Furthermore, import prices helped to stabilize non-food inflation.
At the same time, despite a certain slowdown in inflation in the services sector, it remains higher than the headline inflation due to demand-side factors.
In November, inflation expectations of households and business entities continued to decline.
Taking the above factors into account, headline inflation at the end of 2025 is expected to be around 7.3 percent. Appreciation of the national currency at a higher rate than previously estimated led to a stronger-than-expected disinflationary impact from import inflation and inflation expectations, necessitating a downward revision of the inflation forecast.
According to the updated forecasts, the inflation rate for the end of 2026 is expected to be around 6.5 percent.
Economic activity remains high, with growth rates forming above their potential. This is evidenced by increased demand in labor market, rising revenues from trade and paid services, and a growing volume of interbank transactions. Against the backdrop of current economic and investment activity, the economic growth rate for the end of the year is expected to form around 7-7.5 percent.
Along with declining dynamics of current inflation, risks related to supply factors persist in the future. This includes pressures related to certain essential food products, the secondary effects associated with the recent rise in transport service prices and the indexation of regulated prices.
The global economy is growing at a higher-than-expected pace amidst gradual easing of global financial conditions and fiscal stimuli. At the same time, prices in world commodity markets remain high. This will continue to support the country’s export revenues in the future.
Favorable external conditions will help the real effective exchange rate form close to its long-term equilibrium trend.
With relatively stable nominal interest rates in the domestic financial market, the decline in inflation and inflation expectations is driving real interest rates higher, stimulating savings in the national currency. This is evidenced by the high growth rates in the volume of time deposits.
At the same time, the high growth rate of retail lending due to widening of financial inclusion reflects strong consumer activity. This will support aggregate demand, potentially intensifying upward pressure on inflation in the future.
Under these conditions, it was deemed necessary to keep the policy rate unchanged at the current level of 14 percent to ensure a stable continuation of the disinflationary dynamic and reducing the impact of inflationary risks.
The Central Bank will ensure the sufficient restrictiveness of monetary conditions to achieve the inflation target of 5 percent. In this regard, monetary conditions may be revised depending on the inflation dynamic and the balance of inflationary risks.
The next meeting of the Central Bank’s Board to review the policy rate is scheduled for January 28, 2026.