The National Bank of Kazakhstan reduced the base rate to 16%

The National Bank of Kazakhstan reduced the base rate from 16.5% to 16%, reported on the regulator’s website.

“Annual inflation is slowing rhythmically. External inflation pressure is gradually decreasing against the background of contractionary policies of central banks and decreased world food prices. At the same time, there are certain factors and risks that require attention,” the message says.

Thus, the regulator noted the high inflation expectations of the population and business, as well as the risks of realizing secondary effects from increasing regulated prices, which were previously compensated by the dynamics of the national currency exchange rate. Among the risks, he also named the acceleration of inflation in Russia and the consequences of non-resumption of the grain deal.

In September, inflation in annual terms fell to 11.8% along a trajectory leading to the lower limit of the forecast range of 10-12% for the year. Monthly inflation amounted to 0.6%, still remaining significantly above historical averages. The republic’s economy in January-August grew by 4.9% in annual terms, the main contribution continues to be made by construction, trade, industry, etc.

The possibility of a further reduction in the base rate in 2023 is significantly limited, the country’s Central Bank emphasizes, and easing of monetary policy later this year “will be considered” if annual inflation slows to a single-digit level.” The regulator is confident that a moderately tight monetary policy will lead to stabilization of inflation at the target level of 5% in the medium term.

Last time the Kazakh regulator reduced rate in August, as the media noted, this was the first reduction since July 2020.