Kyrgyzstan Lifts Key Interest Rate to 12 Percent to Curb Inflation

(MENAFN) The National Bank of Kyrgyzstan lifted its benchmark interest rate by 100 basis points to 12 percent on Tuesday, signaling a decisive shift toward monetary tightening as inflationary pressures mount across the Central Asian economy.

The move, announced via a statement on the central bank's official website, comes as inflation has climbed 1.8 percent since the start of 2026 through February 13, with the annual rate running at a considerably steeper 9.6 percent.

Economic momentum has paradoxically intensified the price outlook. Real GDP surged 9 percent in January 2026, propelled by accelerating activity in the services and construction sectors. Rising real incomes and an expansion in consumer lending have further stoked domestic demand — a combination the bank warned is amplifying price pressures.

"Rising real incomes and expanding consumer lending have supported domestic demand. Together, these factors have created an additional inflationary impetus," the statement said.

With growth outpacing sustainable levels, the central bank made clear that policy intervention could no longer be deferred. "Given inflationary factors in the economy, the widening GDP gap and rising consumer demand, a tightening monetary policy is now necessary to create sustainable conditions for slowing inflation," it added.

The rate increase reflects the bank's effort to cool an overheating demand environment before price growth becomes more entrenched, even as the broader economy continues to post strong headline numbers.

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