National Bank: Inflation Amounts to 5.6 percent since Beginning of Year

ASTANA – National Bank Chairman Daniyar Akishev reported about a 5.6 percent inflation rate since the beginning of the year at the Oct. 25 government meeting on social and economic development for the first nine months of 2016. He also discussed the results of the National Bank’s ongoing monetary policy and the situation in the Kazakh financial market.

Photo credit: arnapress.kz

Photo credit: arnapress.kz

Inflation was only 0.2 percent in September and the annual rate from the beginning of the year reached 5.6 percent, which corresponds to the long-term values in the pre-crisis period, he said.

“The National Bank considers that it is possible to achieve target annual inflation in three to four years,” he added.

Akishev noted reducing the annual inflation rate to 8 percent will mean completing the adaptation process of domestic prices to the new parametres of the exchange rate.

“Therefore, the main priority of the National Bank is early stabilisation of the annual inflation rate in the corridor established at around 8 percent. It is impossible to revive investment activity and reduce rates in the national currency without the stabilisation,” he added.

The National Bank’s priority is to form interest rates in the market and Oct. 3 it established the base rate of 12.5 percent, he said.

The chairman emphasised the National Bank hasn’t intervened in the foreign exchange market and the situation in the domestic foreign exchange market is stable. At the end of September, the tenge exchange rate was 335.46 tenge per dollar, strengthening from the beginning of the year by 1.3 percent. The tenge exchange rate is formed only under the influence of fundamental factors, which currently have a positive trend. Akishev noted.

He added the policy of a free floating exchange rate allowed starting the process of gradual recovery of the reserves and the National Bank’s gold and foreign currency reserves in the end of September reached $31.4 billion. The National Fund’s gold and foreign currency reserves amount to $64.4 billion. The country’s total reserves thus reached $95.8 billion, which is 67 percent of the GDP.

He also reported about the positive trajectory in restoring confidence in tenge assets and the reduction in the volume of deposits in foreign currencies. This result was achieved due to measures taken by the National Bank to increase the attractiveness of the national currency and the state’s dedollarisation policy.