National Bank of Kazakhstan Reduces Base Rate to 15.75% as Inflation Decelerates

ASTANA — The Monetary Policy Committee of the National Bank of Kazakhstan (NBK) reduced the base rate to 15.75% per annum, with a corridor of +/- 1 percentage point on Nov. 24, NBK’s press service reported. The decision, driven by updated forecasts, data analysis, and an evaluation of inflation risks, reflects a strategic response to the evolving economic landscape.

Photo credit: Turar Kazangapov/Tengrinews.

As of October 2023, annual inflation has demonstrated a dynamic deceleration, reaching 10.8% and moving closer to the lower end of the previously forecasted range. Projections suggest a further shift into the single-digit zone in the upcoming months. October’s monthly inflation rate experienced a notable slowdown, averaging historical values.

“The external inflationary pressure has continued to ease, propelled by the contractionary policies adopted by central banks and a decline in global food prices. However, certain factors and risks require attention. The country’s economy remains susceptible to pro-inflationary influences, including fiscal stimulus, robust domestic demand, and persistent high and volatile inflation expectations,” reads the bank’s statement. 

Future decisions regarding the base rate will be contingent upon the alignment of actual inflation dynamics with forecast trajectories. According to the bank’s statement, achieving the goal of a 5% inflation target, set by President Kassym-Jomart Tokayev, necessitates maintaining moderately tight monetary conditions in the medium term.

The NBK’s base case scenario envisions stabilizing Brent oil prices within the $85-90 per barrel range until the year’s end. This outlook is shaped amid OPEC+ production cuts and ongoing geopolitical turmoil in the Middle East. 

“The baseline scenario anticipates a gradual decline in Brent oil prices to an average of $85 and $80 per barrel in 2024 and 2025, respectively. This projection is based on expectations of moderate energy demand amid weaker global economic growth,” reads the bank’s statement.

The next decision regarding the base rate will be announced on Jan. 19, 2024, at noon Astana time.

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