Central banks are entering a critical phase of monetary policy where the timing of interest rate reductions could determine whether inflation remains anchored or rebounds, economists warned at the Tashkent Monetary Policy Dialogue.
The consensus among experts is that premature easing poses a significant risk to price stability, potentially undoing years of progress made after periods of elevated prices and repeated economic shocks.
The debate over the pace of normalization has intensified as policymakers grapple with the dual mandate of supporting growth while ensuring inflation expectations remain firmly controlled.
Economists at the dialogue emphasized that credibility is the central bank’s most valuable asset; if markets perceive that rate cuts are driven by political pressure or short-term growth concerns rather than sustained disinflation, long-term inflation expectations could become unmoored.
Uzbekistan was highlighted as a case study in how credibility shapes outcomes.
The country’s recent experience—characterized by lower inflation, falling inflation expectations, and reduced dollarization—demonstrates the tangible benefits of a disciplined, transparent monetary policy framework.