Central Bank explains expensive loans and expects rates to decline over the next 3–4 years

Why loans cost 20–34%

Deputy Chairman of the Central Bank Nodirbek Achilov, at a press conference on November 4, explained why commercial banks continue to issue loans at 20–34% per annum despite keeping the key rate at 14%. According to him, a downward trend is already visible in the market: compared with August 2025, average loan rates have fallen by roughly 2–3 percentage points. Mortgages have become noticeably cheaper: three or four years ago housing loans were issued at 24–25% per annum, while offers of around 18% can now be found. The highest rates remain on microloans, short-term unsecured loans, and loans issued online on an expedited basis — and even in this segment, according to the regulator's assessment, rates are gradually declining.

Two reasons for expensive borrowed funds

Achilov named two key reasons for high rates. The first is demand for loans accumulated before the 2017 liberalization of the economy: individuals' opportunities to borrow were previously limited, and after liberalization this demand poured into the banking system, keeping the cost of money high. Now, according to the Central Bank's assessment, the credit market is gradually becoming saturated. The second reason is the low level of domestic savings in the previous decade: banks need resources for lending, while the deposit base remained small for a long time compared with the accumulated demand. In recent years the deposit base has been growing actively, which, in the deputy chairman's logic, should contribute to cheaper loans.

What the Central Bank's data show

The regulator's statistics confirm the described dynamics, with deposits becoming cheaper faster than loans. According to the Central Bank's latest published data, in August 2026 the weighted average rate on loans in the national currency was 21.3% for individuals, down from 22.1% in January, and 22.3% for legal entities, down from 23.4%. The yield on term deposits in sums fell over eight months from 18.9% to 17.2%: for the population from 20.6% to 18.4% (minus 2.2 percentage points), and for legal entities from 16.3% to 15.5%. Thus, rates on household deposits fell by 2.2 percentage points, versus 0.8 percentage points on loans to individuals. Achilov added that deposit offers with yields above 18% per annum are becoming increasingly rare, and the Central Bank expects these rates to decline further as well.

When to expect a decline

The Central Bank expects that in the next three to four years rates on loans and deposits will approach balanced levels. At the same time, any further reduction in the key rate, Achilov emphasized, depends primarily on a sustained slowdown in inflation and inflation expectations: 'If inflation does not decline... we will not be able to lower the key rate.' On November 4, the Central Bank's board kept the key rate at 14%, citing high domestic demand and inflation risks, but allowed for its gradual reduction to a single-digit level in 2027–2029 if inflation sustainably falls toward the 5% target. To make money cheaper, the regulator is cooperating with the IMF and the EBRD and is counting on increased competition in the banking sector and the development of floating-rate credit products. Even with an overall decline in rates, unsecured and quickly issued loans, according to Achilov, may remain relatively expensive.