The Monetary Policy Committee of the National Bank of Kazakhstan (NBK) announced a reduction in the base rate by 25 basis points to 14.25% per annum, with a corridor of +/- 1 percentage point, effective since July 5.
The decision follows a previous rate cut on May 31, when the NBK reduced the rate from 14.75% to 14.5% per annum. The rationale behind these moves primarily revolves around managing inflation, which, despite showing a gradual decline in May and June 2023, remains a significant consideration for monetary policy.
Inflation in Kazakhstan has been evolving within the bounds of the NBK's forecasts, albeit slightly below their central projections. This trend is partly attributed to decreased inflation expectations among the population after peaking in April. However, external factors pose challenges, including rising global food prices and accelerated inflation in neighboring Russia, influencing Kazakhstan's inflationary landscape.
Looking ahead, the NBK emphasized its commitment to monitoring incoming data, particularly sustainable inflation trends and the convergence path towards the target rate. The next forecast round scheduled for August will assess various risks, including fiscal policy parameters and the implications of monetary easing driven by exchange rate dynamics.
The NBK intends to maintain moderately tight monetary conditions over the long term to solidify the trend of decelerating price growth and achieve the inflation target of 5%.
The next scheduled announcement on the base rate by the Monetary Policy Committee is slated for August 29, 2024.
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