Central Bank expects inflation to decline to 5% in the second half of 2027
By the end of 2026, the Central Bank forecasts inflation at around 7%, while the key rate remains at 14%
The Central Bank of Uzbekistan has presented a preliminary conceptual draft of the main directions of monetary policy for 2027–2029. According to the regulator's baseline scenario, inflation will reach the 5% target in the second half of 2027 and remain at this level in 2028–2029. The GDP growth forecast for 2027 has been raised from 6–7% to 7–7.5%, while the economy is expected to grow by 6.5–7.5% annually in the following two years.
For 2026, the Central Bank expects GDP growth of around 8% (the January–September figure was 8.3%), driven by investments, household incomes, remittances, and non-commodity exports. However, due to the outpacing growth of aggregate demand and the planned increase in tariffs for liquefied gas, hot water, and heating by the end of the year (+0.8 percentage points to inflation), the year-end inflation forecast for 2026 has been revised from 6.5% to 7%. The key rate remains at 14%.
To slow inflation by more than 2 percentage points in 2027, three factors must come into play:
Exhaustion of the base effect: the exit of last year's energy tariff increases from the annual calculation (minus 0.8–0.9 percentage points).
Tight monetary policy: maintaining the real UZONIA money market rate at 6–7% in 2027 will balance demand and reduce inflation expectations.
External stability: weakening external price pressure and expansion of domestic supply.
The baseline scenario assumes Uzbekistan's accession to the WTO in 2027, maintaining the budget deficit at around 3% of GDP, a decline in the average Brent oil price from $96 to $84 per barrel, and an increase in the price of gold from $4,510 per ounce in 2027 to $4,650 by 2029. The growth of real household incomes is estimated at 7.5–8% per year, while investments and the credit portfolio are expected to grow by 12–14% in 2027.
The regulator has calculated four stress scenarios that could drive inflation above the forecast:
Devaluation of the currencies of major trading partners and a decline in remittances (+0.8–1 percentage points to inflation).
A credit boom amid accelerated privatization of state banks and the arrival of foreign players (+0.6–0.9 percentage points).
A new escalation of conflict in the Middle East with a 25–30% increase in oil prices (+0.3–0.5 percentage points).
The impact of the El Niño phenomenon and an 8–10% rise in global food prices (+0.2–0.4 percentage points).
In 2027–2029, the Central Bank will modernize its operational framework: it will transition forecasting models to Python, introduce Islamic financing tools, and establish a risk hedging institute for exporters under ISDA/GMRA standards. Together with GFTN, the development of a wholesale central bank digital currency (CBDC) has begun, with a pilot scheduled from the second quarter of 2027 to the first quarter of 2028. In 2027, the Central Bank's board will hold eight meetings on the key rate (the first on February 3), four of which will be accompanied by press conferences.
