June 11, 2020 / 9:56 AM / a month ago

UPDATE 2-Uzbekistan's central bank keeps policy rate unchanged

(Adds comments on recommended lending rates)

TASHKENT, June 11 (Reuters) - Uzbekistan’s central bank kept its key interest rate unchanged at 15% on Thursday, saying it wanted to see a steady trend towards lower inflation before easing its monetary policy.

Monthly inflation slowed to 0.3% in May from 1.7% in April, the bank said, while economic activity started recovering after the coronavirus pandemic prompted a two-month lockdown.

But the bank said it maintained a full-year consumer price index forecast of 11.0% to 12.5% for now and saw risks both on the supply and demand sides. The bank will next review the rate on July 23.

The central bank’s decision came after Deputy Prime Minister and Economy Minister Jamshid Kuchkarov said he expected a cut in lending rates in order to bolster post-pandemic recovery.

First Deputy Governor Botir Zakhidov said that although the regulator was keeping its rate flat, it was urging local lenders to reduce lending rates to 21% for businesses and 24% for consumer loans.

“There is a great risk of default on loans with 26% interest rate,” he told a briefing, adding that banks that stick to recommendations would receive support from the state.

The regulator said it was actively providing liquidity to local banks and has introduced irrevocable credit lines to support the lenders. (Reporting by Mukhammadsharif Mamatkulov, writing by Olzhas Auyezov, editing by Larry King)

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