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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 37 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 37 institutional desks. No promotion.
Lead — The Central Bank of Uzbekistan's decision to maintain its policy rate at 14.00% signals a cautious approach, with a potential for a modest rate cut in Q4 2026 as inflationary pressures ease. Per the full note from ing-think, the central bank's dovish tone highlights both domestic and external risks that could impact this outlook. This dovish hold is informed by recent inflation trends, with headline CPI reducing to 6.2% YoY in August from around 10% earlier in the year, suggesting a more stable inflation environment. However, external pressures, particularly from elevated commodity prices, continue to pose risks to ongoing price stability.
The desk interprets the Central Bank of Uzbekistan's decision to maintain its policy rate at 14.00% as a clear signal of caution amid an evolving inflation landscape. Per the full note from ing-think, this dovish hold sets the stage for a potential rate cut in Q4 2026 as inflation subsides, albeit tempered by external events that could undermine this outlook.
Supporting this perspective is the recent data showing a decline in inflation, with core CPI dropping to 5.5% YoY and household expectations following suit. However, persistent external pressures, particularly from global commodity markets, could complicate the central bank's easing strategy.
The alternative read would suggest that the bank may have opted for a stronger stance if not for these ongoing risks, but the dovish message seems to prevail in current sentiments.
Our consensus target for the Uzbek soum is currently set at 1.075, with the following firm forecasts: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
The desk's outlook aligns with jpmorgan's positioning toward the upper end of the expected range, while it diverges notably from bofa, which contemplates a more conservative scenario.
The desk's view resonates with firms like jpmorgan, which are positioned for a stable outlook alongside a softening inflation expectation, indicating alignment in future easing. In contrast, bofa holds a divergent stance, reinforcing the notion of continued caution in policy adjustments.
Watch currency pairs linked to Uzbekistan's economic conditions, as external pressures from commodity prices may mirror movements in broader market trends.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
Market implications
Market participants should monitor the Uzbek soum for potential shifts, especially with a focus on commodity price fluctuations that could influence inflation rates. The next pivotal date to watch will be the release of inflation data in the coming months, as it may now directly impact Q4 decisions.
Risks to this view
The outlook could be invalidated by a resurgence in inflation, driven by unexpected spikes in global commodity prices or adverse domestic economic developments that necessitate a policy tightening rather than easing.
Older quick take Quick take Published 11:36 Uzbekistan Uzbekistan’s dovish hold keeps a fourth-quarter rate cut in view The Central Bank of Uzbekistan left its policy rate unchanged at 14.00%, matching expectations. The September statement includes a subtle dovish shift, favouring a modest rate cut in 4Q26 as a base-case scenario. Still, this view would be subject to domestic and external risks that cannot be neglected We see a modest rate cut in the fourth quarter as the most likely scenario following today's dovish hold from the CBRU 14.00 CBRU policy rate, % Unchanged As expected Why did the CBRU stay on hold?
The Central Bank of Uzbekistan (CBRU) kept its policy rate unchanged at 14.00%, extending the pause that began in the first half of 2025. The decision comes despite continued progress on inflation. Headline CPI slowed to 6.2% year-on-year in August from 6.4% in June-July and c.10% at the beginning of 2025; core inflation eased to 5.5% YoY; household inflation expectations continued to trend lower, and the Uzbek soum remained a source of disinflationary support through its appreciation in real effective terms.
Nevertheless, policymakers continue to see several reasons for caution. The CBRU statement highlights the broad-based nature of price pressures, noting that a sizeable share of goods and services still records inflation above the 5% target. The central bank also remains concerned about potential second-round effects from the ongoing liberalisation of regulated domestic tariffs.
External risks remain another important consideration. The CBRU argues that elevated commodity, food and energy prices continue to create inflationary pressures through import prices, transport and logistics costs. We find this part of the argument particularly convincing, given the sensitivities in CIS-4 we outlined earlier this year.
The recent global backdrop has become less supportive of policy easing, with core-market rates remaining elevated, commodity prices moving higher, and central banks in the region, such as Armenia, turning hawkish . CBRU remains cautious despite steady disinflation Source: National sources, CEIC, ING "> Source: National sources, CEIC, ING Guidance becomes more dovish Also in line with our expectations , CBRU communication appears more dovish than the July statement. Most notably, the CBRU now acknowledges that inflation continues to trend downward and that the economy is showing signs of more balanced dynamics.
Policymakers also recognise that credit growth is gradually moderating under the impact of tight monetary conditions and that some components of aggregate demand are beginning to stabilise. This contrasts with July's emphasis on rapidly growing domestic demand and persistent inflationary pressures. The statement also highlights the disinflationary role of the stronger soum, an argument that was largely absent from previous communications.
Together with lower headline and core inflation, moderating credit growth and improving inflation expectations, this suggests that policymakers are increasingly confident that current monetary conditions are sufficiently restrictive. Importantly, the central bank is not signalling an imminent rate cut. However, for the first time in several meetings, the communication appears consistent with policymakers starting to contemplate eventual easing if disinflation continues.
Proinflationary risks appear contained for now Source: National sources, CEIC, ING "> Source: National sources, CEIC, ING Why we expect easing in 4Q26 We view a modest rate cut in 4Q26 as the most likely scenario. One important reason is the degree of monetary restrictiveness already embedded in the economy. With headline inflation at 6.2% YoY and the policy rate at 14.00%, Uzbekistan currently has a policy rate-inflation differential of roughly 7.8 percentage points, the highest across our CIS/CCA coverage universe.
While inflation expectations remain above current CPI, the gap between policy rates and realised inflation remains sizeable and should allow some room for policy normalisation as upside inflation risks become more manageable. At the same time, the currency continues to benefit from supportive balance-of-payments dynamics, while inflation expectations are moving in the right direction. Assuming these trends persist, the current policy stance may become increasingly restrictive relative to the inflation outlook.
Uzbekistan's real rates are sufficiently high Source: National sources, CEIC, ING "> Source: National sources, CEIC, ING What could delay a cut? The main risk to our easing call remains robust domestic demand. Uzbekistan has repeatedly surprised on the upside in terms of growth and consumer spending, and the CBRU's concerns about demand-driven inflation should not be dismissed lightly.
GDP grew 8.5% YoY in 1H26, substantially above the original official full-year growth assumption of 6.6%. While some components of demand appear to be stabilising and credit growth is moderating, the economy continues to expand at a very strong pace. A stronger-than-expected growth backdrop could therefore make policymakers more reluctant to begin easing.
A second risk comes from imported inflation. Renewed tensions in the Middle East, higher global commodity prices and hawkish shifts in core and regional rates could reduce room for policy rate cuts in Uzbekistan. By contrast, we view the regulated price story as a somewhat less convincing obstacle to easing than in previous years.
While tariff liberalisation remains an important inflation risk in theory, experience from the 2024-25 adjustment cycle suggests that the resulting second-round effects have been more limited than initially feared. The currency should remain an important disinflationary factor. Even following a roughly 3% appreciation since the outbreak of the Iran conflict earlier this year, the Uzbek soum continues to benefit from strong remittance inflows and supportive external accounts.
In addition, a catch-up in official gold exports, following periods of reduced export activity from late 2025 until March 2026 and again in May-June 2026, could provide further support to the balance of payments. Overall, the September meeting represents a dovish hold. The CBRU is not ready to cut rates yet, but the tone of the statement suggests that the discussion is gradually shifting from whether easing is possible to when it can begin.
Uzbekistan Real rates Policy rate Inflation GDP growth Exchange rate CIS sovereigns Central banks Budget Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Author Dmitry Dolgin Chief Economist, CIS Older quick take
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