The cycle of restrictive monetary policy has been completed, says the NBM. Thus, the National Bank continues to focus on stimulating aggregate demand, including by stimulating consumption and investments, balancing the national economy and the current account, as well as on containing inflation expectations.
NBM: “The situation has now stabilized – shocks to some components of the consumer price index in May-June this year, caused by tensions in the Middle East, had a very short-term inflationary impact and partially smoothed out,” the official statement said.
According to the current forecast, annual inflation will trend downward by the end of this year and in the first half of next year and then stabilize until the end of the forecast period amid disinflationary aggregate demand, the central bank justified its decision, noting that “domestic economic activity and inflation remain vulnerable to supply shocks, including the increase in regulated tariffs from late 2024 and early this year, as well as the decline in agricultural production under the influence of unfavorable factors,” the statement said.
According to the forecast, although inflation will decline, its annualized rate by year-end “is not yet within the target range of fluctuations.” Uncertainty in agricultural production, energy prices and domestic tariffs persists, posing additional risks amid tensions in the region and the Middle East, fragmentation of international trade and slowing economic growth in the European Union.
In mid-August, the NBM promises to come out with a more detailed analysis of the domestic and external economic situation, as well as to give a medium-term inflation forecast until the end of 2027.
