At a press conference, the Deputy Chairman of the National Bank, Azat Kozubekov, spoke about how changes in the discount rate can affect the credit market, particularly mortgage lending.
He noted that in the economic structure of Kyrgyzstan, monetary policy primarily impacts the deposit market, as changes in the discount rate influence the yield on deposits.
With the increase in deposit rates, savings in Kyrgyz soms become more attractive for citizens and entrepreneurs. This, in turn, boosts demand for soms and reduces pressure on the currency market, which helps control inflation.
However, the impact of the discount rate on credit products manifests with some delay and indirectly. As Kozubekov pointed out, the effect on interest rates for loans, including mortgages, has a longer-term nature.
He also emphasized that when making decisions, the regulator considers the potential impact on credit activity and economic growth.
At the National Bank, it is believed that inflation has a more serious negative impact on economic activity than the moderate and gradually increasing influence of changes in the discount rate on the cost of loans.
Therefore, the priority of monetary policy remains the maintenance of price stability, even if this leads to a gradual adjustment of lending conditions.
