Uzbekistan: central bank expectedly keeps rate unchanged, signals possible cut in 2H22 at the earliest

At today's meeting, the Central Bank of the Republic of Uzbekistan (CBRU) decided to keep the base rate unchanged at 14%, in line with our expectations. Although the tone of the press release was somewhat softer, no signals were given regarding the timing for a transition to rate cuts. Among the arguments contributing to this decision, the CBRU noted 1) persisting external inflationary pressure; 2) further recovery of economic activity as a result of, among other things, 3) recovery of consumer demand; and 4) ongoing heightened inflationary expectations. The CBRU noted that it considers this year's fiscal stimulus as one of the main factors supporting consumer demand and investment activity in 1H22 given current monetary conditions. In this regard, we believe that the Uzbek central bank will be able to return to the issue of rate cuts no earlier than in 2H22.