The impact of the policy rate on lending rates in Uzbekistan

Abstract

This article examines the impact of changes in the policy rate ofлект the Central Bank of the Republic of Uzbekistan on commercial banks’ lending rates in the national currency. It discusses the interest rate channel of monetary policy, the transmission of policy rate changes to the cost of credit, and the time lags associated with this process. The study draws on official statistics published by the Central Bank and econometric assessment results based on data from 23 commercial banks for 2019–2023. The findings indicate that policy rate changes are transmitted to lending rates gradually, with a more noticeable effect emerging from the second month. The article also considers the role of preferential lending, banks’ funding structures, credit risks, and interbank competition in shaping the effectiveness of interest rate transmission.