With low inflation risks, Kyrgyzstan slashes rates

The National Bank of the Kyrgyz Republic cut its policy rate by 2 percentage points to 6 percent, extending the easing cycle which has nearly halved the key rate within the space of just two months.

The Bank justified its decision by a favourable inflation outlook:

In the conditions of low inflationary pressure, weak indicators on economic development, taking into account the forecast of the inflation dynamics in the medium term, the National Bank decided to continue decreasing the policy rate.

Attending the press conference of Kyrgyz central bank Governor.

Attending the press conference of Kyrgyz central bank Governor.

The Bank downgraded its assessment of the risks surrounding its as-yet-undisclosed inflation forecast, saying that the rate-cut decision will "stimulate the real economy while maintaining low inflationary risks". Back in March it said "factors of inflationary pressure still exist".

So far so good. The Bank keeps moving, however slowly, towards adopting standard communication practices of inflation targeting central banks. Still, the Bank could have been, in my view, a little more explicit on the inflation outlook and the forecast risks this time around. Maybe next time.