Central Bank raises policy rate to 12 percentage stabilizing inflation outlook

The Central Bank announced on Wednesday that it has increased the policy rate to 12%, aiming to curb persistent inflationary pressures and anchor inflation expectations. The decision, revealed after the regular monetary policy meeting, signals a calibrated shift to restrict demand while monitoring financial conditions.

Officials stated the rate move responds to stronger-than-expected consumer price dynamics and a faster recovery in domestic demand. The Central Bank kept its forward guidance open, emphasizing data dependence and the possibility of further adjustments if inflation does not show a sustained decline.

Markets reacted quickly: short-term yields rose and the currency strengthened modestly as investors priced in tighter monetary conditions. The Bank highlighted that liquidity operations and macroprudential tools will remain available to smooth market functioning.

Governor’s remarks reiterated commitment to price stability and noted that core inflation measures still exceed the target range. The statement included updated projections showing a gradual disinflation path contingent on continued disinflation in food and services sectors.

Consumer lending and credit growth will be closely watched, the Bank said, as higher rates could cool household demand and slow consumption-driven inflation. Fiscal stance and external factors were cited as important contributors to the near-term outlook.

Liberal News Analysis: What Does This Development Mean?

Raising the policy rate to 12% reduces immediate inflation risks by dampening demand and tempering credit expansion. For markets, the move restores policy credibility and can lower risk premia, but it also raises borrowing costs for firms and households, potentially slowing investment and consumption growth in the quarters ahead.

Structural drivers—such as food supply shocks or administered price adjustments—remain outside monetary control, so the Bank’s action must be complemented by targeted fiscal and regulatory measures to deliver sustainable disinflation without an unnecessary growth penalty.

Quick Glance: What You Need to Know

• Policy rate raised to 12% amid persistent inflationary pressures.
• Central Bank maintains data-dependent guidance and may adjust policy further.
• Markets reacted with higher short-term yields and a firmer currency.