In recent months, the pace of disinflation has slowed, while price pressures have persisted due to certain supply-side factors and external economic conditions. Domestic demand continues to grow at a rapid pace.
Amid strong domestic demand, second-round effects of changes in energy tariffs, and uncertainty in the external economic environment, the Board of the Central Bank considered it necessary to maintain tight monetary conditions to achieve the 5 percent inflation target.
In June, headline inflation accelerated to 6.4 percent year-on-year. This acceleration in inflation was mainly driven by increases in regulated energy tariffs and the liberalization of coal prices.
Core inflation stood at 5.7 percent and remained broadly unchanged in recent months. At the same time, the second-round effects of increases in regulated prices may become evident in underlying inflation during the second half of the year.
Inflation expectation of both households and businesses declined. In June household inflation expectations stood at 10.1 percent, while businesses expectations were 9.9 percent.
The growing share of goods and services with more than 5 percent increase in prices, together with the halt in decline of core inflation, indicates that inflationary pressures remain persistent in the economy.
The headline inflation forecast for the end of 2026 remains unchanged at 6.5 percent.
Economic momentum remains strong. In the first half of this year, real GDP grew by 8.5 percent. Strong growth in retail trade and services reflects robust consumer activity, whileinvestment dynamics indicate strong investment demand.
The continued increase in investment inflows, including foreign direct investment, and fiscal spending planned for the second half of the year are expected to support economic activity and domestic demand. Economic growth is projected at around 7.5–8 percent in 2026.
Risks of rising food and commodity prices in global markets persist amid heightened geopolitical tensions. In addition, disruptions to fuel supplies in trading partner countries, together with higher logistics and transportation costs, may place additional pressure on domestic inflation through import prices going forward.
At the same time, the temporary pause in global disinflation and monetary policy tightening in a number of countries increase the likelehood that external financial conditions will remain tight for longer than previously expected. This, in turn, may prolong uncertainty surrounding external financing conditions.
Monetary conditions currently remain tight. Positive real interest rates support households’ propensity to save and contribute to a moderation in credit growth.
Current monetary conditions are assessed to be sufficiently tight to contain inflationary pressures amid strong demand in the economy and to limit the second-round effects of tariff adjustments.
Taking the above factors into account, maintaining policy rate at 14 percent per annum allows inflation to decline gradually towards the target level and helps anchor expectations.
The Central Bank will closely monitor inflation dynamics, inflation expectations, domestic demand factors, and changes in external economic conditions, and will continue to maintain the monetary conditions necessary to ensure price stability.
The next meeting of the Central Bank Board to review the policy rate is scheduled for 16 September 2026.
