Base Rate Raised to Reduce Inflation in Medium Term, Says Chair of Kazakhstan’s National Bank

NUR-SULTAN – The National Bank set the base rate to 14.5 percent per annum on July 25 to reduce inflation in the medium term, Chair of the National Bank Galymzhan Pirmatov told Kazinform.

Annual inflation in May accelerated above the National Bank’s forecasts.

Chair of the National Bank Galymzhan Pirmatov.

“Annual inflation accelerated to 14 percent in May and 14.5 percent in June, which is above our forecasts. We see that inflation has not peaked, and price shocks have not been absorbed. We observe significant inflationary risks due to the growth of budget expenditures and the budget deficit persistence,” said Pirmatov.

According to the bank’s forecasts, inflation will be more than 15 percent and exceed the upper limit of the previous estimates (13-15 percent) at the end of 2022.

Inflation will continue to grow until the end of the first quarter of 2023 and slow down in the absence of new shocks. “The monetary policy decision is an urgent measure to prevent uncontrolled rising prices amid unprecedented inflationary pressures,” explained Pirmatov.

Domestic inflation continues to rise amid geopolitical tensions. It relates to difficulties with the transportation of goods, an increase in delivery times, high world energy prices, and rising logistics costs.

“The National Bank has major tasks in a period of challenges for the entire global economy. We monitor the situation for the impact on our economy and make the necessary decisions in order to ensure financial and price stability in Kazakhstan,” Pirmatov said.

It should be noted that inflation accelerated in 16 regions and slowed down in the East Kazakhstan region, according to the National Bank’s Inflationary Trends in the Regions report.

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