At the press conference, the Deputy Chairman of the National Bank, Azat Kozubekov, explained how changes in the discount rate affect the credit market and mortgage lending.
According to Kozubekov, the economy of Kyrgyzstan is structured in such a way that changes in monetary policy primarily impact deposits. An increase in the discount rate primarily raises the yield on deposits.
When deposit rates rise, it makes savings in the national currency more attractive for both citizens and businesses. As a result, the demand for soms increases, which reduces pressure on the foreign exchange market and helps control inflation.
However, the impact of the discount rate on credit products occurs with a certain delay and indirectly. As Kozubekov noted, the influence on interest rates for loans, including mortgages, manifests over a longer term.
He also added that the regulator takes into account the potential impact on lending and economic growth when making decisions.
At the National Bank, it is believed that inflation has a significantly more serious negative impact on economic activity than the moderate and prolonged effect of changes in the discount rate on the cost of loans.
Thus, the main task of monetary policy remains to ensure price stability, even if this requires a gradual adjustment of loan conditions.
