Uzbekistan’s central bank has spent eight years engineering one of the more impressive inflation turnarounds in the emerging market world. Now, with the finish line in sight, policymakers are making one thing very clear: do not blink.

The Tashkent Monetary Policy Dialogue, convened around June 29, brought together economists and central bankers from institutions including the Bank of England, MIT, and Oxford University. The core message from the event was simple, even if the economics behind it are not: cutting rates too soon could undo years of painstaking work.

From 20% inflation to 5.5%, the hard way

In early 2018, Uzbekistan’s headline inflation sat at roughly 20%. By May 2026, headline inflation had fallen to 5.5%. Core inflation sits at approximately 5.7%, and inflation expectations have roughly halved from around 20% to around 10%. The Central Bank of the Republic of Uzbekistan’s official target is 5%.

CBU Governor Timur Ishmetov acknowledged the progress but framed it in the context of risk. The last mile of inflation reduction is historically the hardest, and the temptation to declare victory early is exactly the kind of mistake that turns a decade of discipline into a cautionary tale.

The CBU has held its policy rate at 14% across both its April and June 2026 decisions. That follows a 50 basis point cut to 13.5% made in July 2024, which itself represented a cautious, data-driven step rather than an aggressive easing cycle.

Why credibility is the whole game

Reduced dollarisation is one of the clearest signals that a population is beginning to trust its own currency. Uzbekistan’s progress on that front is real. The combination of lower inflation, falling expectations, and reduced dollarisation represents a feedback loop working in the right direction.

What this means for investors

For foreign investors, the signal from Tashkent is constructive. A central bank willing to hold rates at 14% while inflation is already down to 5.5% is demonstrating the kind of policy discipline that attracts long-term capital. It also reduces currency risk for investors entering Uzbek markets, since a credible inflation anchor makes exchange rate volatility more predictable.

The risk to watch is political patience. Holding rates at 14% when inflation is at 5.5% requires a central bank that is insulated from short-term pressure to stimulate growth. The Tashkent dialogue was, in part, an exercise in building the intellectual scaffolding to justify that patience, drawing on the credibility of institutions like the Bank of England and Oxford to reinforce the case for staying the course.

If the CBU does begin cutting rates, the pace and timing will matter more than the direction. A gradual, well-telegraphed easing cycle that keeps real rates positive would likely be received well by markets. A surprise cut before inflation hits target would be interpreted very differently, potentially triggering exactly the kind of expectation reset the dialogue was designed to prevent.