Headline inflation continued to decline and, according to forecasts, is expected to slow to 6.5 percent by the end of the year. At the same time, the process of price stabilization has slowed, while the impact of external factors has intensified.
Amid accelerating economic activity, strong aggregate demand, and uncertainty in the external economic environment, it was deemed necessary to maintain tight monetary conditions to ensure a sustained reduction of inflation to the 5 percent target level.
In March 2026, headline inflation declined to 7.1 percent year-on-year, in line with the forecast. This decline was mainly driven by the fading of last year’s high base effects for certain goods. Core inflation stood at 5.7 percent.
Inflation expectations continued to decline in March. However, they remain above the forecasted inflation levels.
The broad-based disinflation process has slowed in recent months This, along with current inflation trends, indicates that certain inflationary pressures persist in the economy.
According to the updated forecasts, headline inflation is expected to be around 6.5 percent by the end of 2026.
Economic activity accelerated in the first quarter this year, with real GDP growth reaching 8.7 percent. Increased activity in services, construction, and trade sectors indicates that aggregate demand factors prevail in the economy.
The steady increase in investments attracted to the country, including foreign direct investment, will continue to support economic growth in the coming quarters.
Taking these factors into account, the economic growth forecast for 2026 has been revised upward to 7-7.5 percent.
Amid elevated geopolitical tensions in the external economic environment, risks of rising global oil and food prices are increasing . Along with rising logistics and transportation costs, this may create additional inflationary pressure through import prices in the future.
At the same time, the appreciation of the currencies of major trading partner countries, high gold prices, and the stable growth of export earnings and remittances are supporting supply in the domestic foreign exchange market.
Positive real interest rates in the economy are supporting households’ propensity to save and contributing to the moderation of credit growth.
Taking into account the above factors, maintaining the current monetary conditions will enable a sustained reduction of inflation to the target level and help anchor inflation expectations.
The Central Bank will closely monitor inflation dynamics, inflation expectations, aggregate demand, and external risks. In the event of increasing upward pressures on headline inflation and rising inflation expectations that can lead to a delay in achieving the inflation target, a sufficient restrictiveness of the monetary policy will be ensured.
The Central Bank’s monetary policy will remain focused on reducing inflation to the 5 percent target level, ensuring macroeconomic stability, and preserving the purchasing power of the population.
The next meeting of the Central Bank Board to review the policy rate is scheduled for June 17, 2026.
