Since the beginning of 2026, the external economic environment has been characterized by increased geopolitical factors related to the situation in the Middle East, leading to high volatility and higher prices in global energy and food markets, and intensifying external inflationary pressures. Since the Kyrgyz Republic is a small, open economy with a high share of imports in the consumer basket, domestic food prices have also begun to adjust in line with global prices.

As of May 15, inflation in Kyrgyzstan since the beginning of 2026 reached 4.7 percent (10.9 percent in annual terms).

«The largest contribution to the inflation structure is provided by rising prices for food products and services. Inflation factors in Kyrgyzstan are becoming non-monetary in nature, driven by external drivers and the continued influence of domestic conditions, such as the planned increase in electricity, housing and utilities tariffs, rising prices for hotel and restaurant services due to ongoing reforms to fiscalize tax procedures, and strong domestic demand,» the National Bank of the Kyrgyz Republic noted.

«The monetary factors of inflation, associated with the increased money supply to the economy through both fiscal and monetary channels, are generally mitigated by monetary policy instruments and the continued stability of the domestic foreign exchange market,» the National Bank said in a statement.

The economy of the Kyrgyz Republic maintains high growth rates amid robust consumer and investment activity. In January-April 2026, the country’s real GDP grew by 12.4 percent. The main contribution was provided by growth in the services and industrial sectors, along with an expansion in construction due to increased investment in fixed assets and the implementation of infrastructure projects. Domestic demand is supported by rising real incomes.

Monetary conditions in the economy remain tight and are aimed at minimizing the impact of external inflationary factors and limiting the secondary effects of domestic factors in order to create conditions for returning inflation to the target of 5-7 percent in the medium term.

«The situation in the domestic monetary and foreign exchange markets remains stable, while the relatively stable exchange rate dynamics of the national currency contribute to maintaining inflation expectations of economic entities and the population within moderate limits. The banking sector has a high level of excess liquidity, which is actively sterilized by the National Bank’s instruments to limit the monetary component of inflation,» the National Bank of the Kyrgyz Republic noted.

Inflation prospects in the Kyrgyz Republic remain sensitive to external conditions. National Bank of Kyrgyzstan

Inflation prospects in the Kyrgyz Republic remain sensitive to external conditions.

«The main external risks are associated with ongoing geopolitical tensions, price volatility in global food markets, and potential disruptions in global supply chains. Internal inflation factors are more predictable and are primarily related to continued domestic demand and the implementation of tariff policy. Taken together, these conditions determine the upcoming inflation dynamics with the balance of risks skewed toward pro-inflationary external factors,» the National Bank of Kyrgyzstan said in the statement.

Under these circumstances, the National Bank continues to closely monitor and assess inflation factors and keeps the National Bank’s discount rate at 12 percent.

Maintaining tight monetary conditions will create sustainable conditions for a slowdown in inflation to 5-7 percent in the medium term. National Bank of Kyrgyzstan

Maintaining tight monetary conditions will create sustainable conditions for a slowdown in inflation to 5-7 percent in the medium term.

Should any risks to price stability arise, the National Bank will promptly respond to emerging inflationary factors.

The next scheduled meeting of the Board of the National Bank of the Kyrgyz Republic on the discount rate issue will be held on July 27, 2026.

The discount rate is a key instrument of the country’s central bank’s monetary policy, determining the cost of short-term borrowing for commercial banks. It influences the overall cost of credit in the economy and lending conditions for businesses and individuals.