The noticeable decrease in inflation in recent months is due to the leveling off of the effect of last year's high base. The dynamics of steady inflation, the formation of strong domestic demand, as well as external economic uncertainty necessitate the maintenance of tight monetary conditions.

In May, overall inflation was 5.5% year-on-year and formed within the forecast trajectory. This decrease was mainly facilitated by the exhaustion of the direct effects of last year's increase in energy tariffs.

At the same time, the indicators of stable inflation remain largely unchanged. So, core inflation was at the level of 5.7%. Along with the slowdown in inflation in the service sector, there was an acceleration in food inflation.

Inflation expectations of the population and entrepreneurs continue to decline. The long-term expectations of financial sector experts have also improved.

High rates of economic activity remain. In particular, the growth in retail trade, services, tourism, and investment demonstrates the resilience of aggregate demand in the economy. At the same time, increased budget spending in recent months will continue to have a stimulating effect on economic activity and demand in the coming quarters.

The increase in energy tariffs in June this year will have a short-term effect on inflation. In addition to the direct tariff effect, secondary factors will appear in the following quarters, acting through the channel of transportation and production costs.

The central bank has maintained inflation forecasts for the end of 2026 at about 6.5%, and economic growth in the range of 7-7.5%.

The positive real interest rates currently prevailing in the economy contribute to stimulating the savings activity of the population and businesses, ensuring balanced credit growth, as well as curbing inflationary pressures.

Uncertainty in the external economic environment remains high. The volatility of global food and energy prices, as well as the risks associated with rising logistical costs, increase the likelihood of external inflationary pressure shifting to domestic prices through the import channel. In addition, the tight monetary policy of foreign central banks prolongs the period of high cost of external financing.

Taking into account the above factors, in order to ensure price stability and reduce inflation expectations, it is advisable to maintain a tight monetary policy.

In the future, a steady decline in inflation expectations, minimization of secondary effects from tariff increases and positive dynamics of core inflation will allow for a gradual easing of monetary conditions.

In the medium term, the Central Bank's monetary policy will aim to reduce inflation to the target level of 5%, which will ensure macroeconomic stability and preserve the purchasing power of the population.

The next meeting of the Central Bank's Board to review the base rate is scheduled for July 29, 2026.