The central bank’s key rate fell below 14 percent for the first time since June 2017. A 0.5% reduction in the base rate will result in the associated floating rate loans being reduced by the same amount.
The central bank changed the key rate from 14 percent to 13.5 percent. It is the first time in 7 years that the base rate has fallen below 14 percent. Central Bank President Mamarizo Nurmurodov spoke at a press conference on July 25 about the impact of the main rate cut.
“Where a 0.5% reduction in the prime rate is projected, this will primarily affect loans allocated with variable interest rates linked to the prime rate. This is directly reflected in loans for education, preferential mortgage loans and loans for family businesses.
The second process, which we see very quickly, is related to money market transactions with the central bank. This is definitely reflected in our repo operations, overnight operations and deposit operations. The direct impact on the money market in the broad sense, which is the same in world experience, can now be extended from II. quarter to VI. quarter. That is, for loans set at market rates. I will say one more thing, it is a bit wrong to tie the loan percentage directly to the prime rate. Because the relationship between each borrower and the bank is a process that is determined based on the borrower’s ability level,” said the MB chairman.
