The National Bank of Tajikistan keeps the refinancing rate unchanged at 16%

At the regular meeting of Monetary Policy Committee (MPC) of the National Bank of Tajikistan (NBT), which was held on October 31, 2017, it was decided to keep the refinancing rate unchanged at 16 percent per annum. This decision was made with a view of limiting possible inflationary risks and gradually reducing inflation to a targeted level of 7.0% +/- 3 percentage points.

According to the statistical data, in September the annual inflation (for last 12 months) continued its downward path and made 6.7%. Although, this rate of inflation was lower than expected, however, it increased compared to the same period of last year by 0.3 percentage point (p.p.).

During this period, the change in the level of annual inflation mainly occurred due to the impact of seasonal and supply side factors, especially a significant increase in prices for vegetables (potatoes, carrots, and onions) during the first half-year. In particular, the highest contribution to the annual inflation was from food prices by 4.6 p.p., where non-foods and services contribution was 1.5 p.p. and 0.7 p.p., respectively. According to the analysis the core inflation which characterizes the long-term price trend without the impact of short-term fluctuations, with domestic demand factors made 2.1% annually indicating the limited impact of monetary factors.

In general, the inflation was mostly affected by seasonal non-monetary factors and transitory processes, while the inflation rate was kept within its medium term targeted indicator of 7.0 (+/- 3) %.

It is expected that by the end of the year due to the impact of one-off factors, such as increasing prices for services (electricity) and seasonal factors, the inflation rate will slightly exceed the targeted indicator (7.0%) and in the medium term will return to the level of targeted indicator. At the same time, the risk of rising inflation expectations due to steady increase in capital expenditures of the state budget, additional costs of productions due to rise in tariffs for services, increase in seasonal demand for currency, financial instability in world markets, may affect the price’s level in the short term.

Therefore, in order to maintain stable price dynamics in the medium term, as well as increase the impact of monetary policy instruments, the refinancing rate was kept unchanged at 16% per annum.

The NBT will continue implementing prudent monetary policy aimed at achieving price stability in the medium term. In case of subdued inflationary risks, the NBT may also consider the issue of likely change of refinancing rate at the regular MPC meetings.

The next meeting of the MPC will be held in December according to the schedule and its decisions will be announced through the official website of the NBT.

Press Division of the NBT