Tashkent, Uzbekistan (UzDaily.uz) — High lending rates at commercial banks in Uzbekistan reflect borrowing demand that built up before economic liberalisation and a shortage of domestic savings, according to the Central Bank.
Central Bank Deputy Chairman Nodirbek Achilov gave this assessment at a press conference on 4 November. He said lending rates should move closer to balanced levels over the next three to four years, the regulator reported.
A journalist from the UzA news agency asked why banks continue to issue loans at annual rates of 20–34% while the Central Bank’s policy rate remains at 14%.
Achilov said market lending rates were already declining. “For example, compared with August 2025, average lending rates have fallen by around 2–3 percentage points,” he said.
Borrowing costs depend on the purpose and term of a loan, as well as its lending conditions. Investment loans are generally cheaper than short-term consumer loans.
Mortgage rates have fallen particularly noticeably. Three to four years ago, housing loans carried annual interest rates of 24–25%, while current market offers include rates of around 18%.
Microloans, short-term unsecured loans and loans issued quickly through online services remain the most expensive. The regulator says rates in this segment are also gradually declining.
Achilov identified pent-up demand as the first reason for high borrowing costs.
“Before 2017, a very large demand for loans had accumulated in the economy. After economic liberalisation began, this demand started flowing into the banking system. Previously, individuals had very limited opportunities to obtain loans. High interest rates partly reflected this strong demand,” he explained.
The Central Bank now considers the lending market to be gradually reaching saturation, with demand becoming more balanced.
The second reason is the low level of savings in previous years. Banks obtain funds for lending through deposits from households and businesses or by borrowing from abroad. For a long time, the deposit base remained relatively small while demand for loans grew rapidly.
Deposits have increased significantly in recent years, and Achilov said the growing supply of funding should help reduce borrowing costs.
Deposit rates are also declining. “Today, banks very rarely offer deposits with returns above 18% per year. Rates are generally within the 18% range. We expect them to decline further,” the deputy chairman said.
The Central Bank expects both the policy rate and the cost of bank loans and deposits to decrease over the next three to four years.
“The economy is in a transition period, and liberalisation has led to a rapid increase in demand for financial resources. The market needed time to adapt to these changes. This process is continuing,” Achilov said.
He identified inflation and inflation expectations as the decisive factors in policy rate decisions.
“If inflation does not decline, if inflation expectations do not fall, we will not be able to reduce the policy rate,” he said.
The Central Bank is working with the International Monetary Fund and the European Bank for Reconstruction and Development to help bring down lending rates.
The regulator also expects stronger competition among banks, a broader range of loan products and the development of financing instruments with floating interest rates to support lower borrowing costs. However, Achilov noted that unsecured loans and loans issued quickly could remain relatively expensive even as rates decline across the market.
According to Central Bank data, the weighted average interest rate on soum-denominated loans to individuals stood at 21.3% in August 2026, down from 22.1% in January. For legal entities, the rate declined from 23.4% to 22.3%.
Deposit rates fell faster over the same period. The average return on term deposits in soums decreased from 18.9% in January to 17.2% in August. For individuals, it fell from 20.6% to 18.4%, while for legal entities it declined from 16.3% to 15.5%.
Thus, over the first eight months of 2026, deposit rates for individuals fell by 2.2 percentage points, compared with a decline of 0.8 percentage points in lending rates for individuals.
On 4 November, the Central Bank Board kept the policy rate at 14% per year, citing strong domestic demand and persistent inflation risks.
The regulator also sees scope for gradually lowering the rate to a single-digit level in 2027–2029 if inflation sustainably slows to the 5% target and inflation expectations continue to decline.
