OBJECTIVES AND PRINCIPLES OF MONETARY POLICY IN UZBEKISTAN

Abstract

This paper examines the monetary policy framework of Uzbekistan, focusing on its transition to an inflation targeting regime since 2020. The Central Bank of Uzbekistan (CBU) operates with the primary objective of maintaining price stability, achieved through the manipulation of its key policy rate and adherence to principles of operational independence, transparency, and market-based exchange rate mechanisms. The CBU's decision-making processes are grounded in comprehensive macroeconomic analysis and forecasting, and are underpinned by a commitment to open communication to shape inflationary expectations. By adopting a free-floating exchange rate, the framework also aims to mitigate the impact of external shocks on the domestic economy. This study analyzes the operational mechanism and key principles underpinning Uzbekistan's approach to monetary policy, highlighting both the challenges and progress made in enhancing macroeconomic stability and fostering sustainable economic growth.