Uzbekistan's central bank announced it will maintain its key policy rate at 14.00% but moved to a noticeably more hawkish posture in its March statement, citing persistent inflationary pressures and growing external risks.
The bank said the disinflationary trend has stalled: headline consumer price inflation remained at 7.3% year-over-year in February. Core inflation, which strips out volatile items, accelerated to 6.3% year-over-year from 5.7% in December 2025.
Officials reported that inflation expectations are no longer settling but instead remain persistently elevated. At the same time, the external environment is described as increasingly pro-inflationary, with geopolitical tensions contributing to higher global energy and food prices.
Against that backdrop, the central bank flagged rising risks of imported inflation. Combined with robust domestic demand, the bank said these forces argue for keeping restrictive interest rate settings in place for an extended period.
The March communication marks a change from the conditional easing language used in January. The bank now explicitly states that policy could be tightened further should the identified risks materialize.
Clear summary
The central bank held the policy rate at 14.00% but adopted a more hawkish stance as headline inflation stalled at 7.3% year-over-year in February and core inflation rose to 6.3% from 5.7% in December 2025. The bank highlighted elevated inflation expectations and an external environment that is increasingly pro-inflationary, and it warned that further tightening is possible if risks crystallize.
Key points
- Policy rate unchanged at 14.00%, but language shifted toward a tighter bias.
- Headline inflation held at 7.3% year-over-year in February; core inflation increased to 6.3% year-over-year from 5.7% in December 2025.
- External pressures - notably higher global energy and food prices linked to geopolitical tensions - and strong domestic demand support the case for restrictive policy remaining in place.
Risks and uncertainties
- Imported inflation risk: higher global energy and food prices create upside inflation pressure - affecting energy and food sectors.
- Persistence of elevated inflation expectations: if expectations do not stabilize, inflation may prove harder to dislodge - impacting consumer-facing sectors sensitive to price shifts.
- Domestic demand strength: sustained internal demand combined with external price pressures could prolong the need for restrictive rates - with implications for credit-sensitive sectors and broader market interest rates.
The central bank's explicit warning that it may tighten policy further if risks materialize signals closer attention to both external price developments and domestic demand conditions. For now, the stance is to keep rates restrictive while monitoring whether the documented risks translate into a sustained inflation impulse.