The National Bank of Tajikistan cuts the refinancing rate to 14% per annum

At its regular meeting held on 19 March 2018 the National Bank of Tajikistan (NBT) Monetary Policy Committee (MPC) decided to cut the refinancing rate by 75 basis points to 14.0% per annum. This decision made in response to stabilizing and declining inflation trajectory, and its balancing within the medium-term inflation objective of 7% (+/- 2) percentage points (p.p.).

According to the statistical data, in February 2018 the annual inflation reached 5.2%, which is less than 1.3 p.p. compared to the previous month. A downward path of inflation mainly occurred due to normalization of inflationary expectation on the back of demand and supplybalance in the domestic food market, as well as foreign exchange market. In particular, there were observed fall in prices for such primary foods like flour, rice, oil, and vegetables. Similarly, fuel prices (liquid gas) declined against the backdrop of stabilization of its import prices.  

Alongside with this a balanced monetary policy implementation restrained monetary and exchange rate pressures on inflation, and as a result, the core inflation that characterizes the long-term price trend without the impact of short-term fluctuations stood at 1.9% annually.

It is projected that inflation will continue its downward trend until the mid-2018 and further in the medium-term will remain in the range of inflation objective of 7%(+/-2) p.p.

At the same time, probabilities of risks to the forecast of inflation are mainly linked with short-term seasonal factors, supply-side shocks, increasing demand for foreign exchange and its volatility, as well as with such external factors like the pace of the US Federal Reserve monetary policy normalizationand geopolitical situation in the region.

In case ofmaterialization of these risks and their impact on macroeconomic indicators, the NBTwill keep its monetary policy stance accordingly.

Currently, due to decline of inflation risks in the economy and gradually stabilizing external economic situation, the NBT does not consider as necessary to continue tightmonetary policy, and thereby reduced the refinancing rate to 14.0% per annum.

The NBT will continue implementing prudent monetary policy aimed at achieving price stability in the medium term. The change in monetary policy instruments will be consideredin the next MPC meetingstaking into account developments in aggregate demand, inflation and its projection, and the impact of internal and external factors on macroeconomic situation.

The next meeting of the MPC is planned to be heldin May according to the scheduleand its decisions will be announced through the official website of the NBT.

Press Division of NBT