Kazakhstan’s National Bank keeps base rate steady

The regulator has maintained the base rate at 15.25% / Photo by Askar Akhmetullin, photo editor: Dastan Shanay

Kazakhstan’s National Bank has decided to keep the base rate unchanged at 15.25%, as foreseen by many experts and market participants. This resolution was made during the monetary policy session on Jan. 17.

The regulator said that this decision was made based on remaining inflationary risks and an acceleration in price growth to 8.6% within the forecasted range of 8% to 9%. The National Bank also added that global food prices remain high and inflation both in Russia and developed economies continues to accelerate.

The regulator also claimed there are signs of economic overheating, linked to the acceleration of the short-term economic indicator to 6.2% year-on-year by the end of 2024. Furthermore, the business activity indicator has stayed within a positive boundary for 11 months straight.

«Aggregate monetary conditions have slightly softened amid a weaker exchange rate, higher inflation expectations and higher actual inflation dynamics. In this regard, at the upcoming meeting, during which forecasts of key macroeconomic indicators will be updated, the Committee will assess the need for additional monetary policy tightening in order to return inflation to a steady downward trajectory towards the 5% target,» the National Bank said in a statement on its official website.

Experts interviewed by the Association of Financiers of Kazakhstan also expected the regulator to keep the base rate at 15.25%. According to their forecasts, the rate is now expected to be reduced to 14% in 12 months. In turn, the National Bank suggests the base rate will fluctuate between 12% and 14.75% in 2025, while the previous estimated range was 9.5% to 13%.

According to Murat Temirkhanov, an advisor to the management board of Halyk Finance, the National Bank will also keep the base rate at 15.25% on its next session, scheduled for March 7, 2025.

At the previous session held on November 29, 2024, the bank raised the base rate by one percentage point to 15.25% per annum. This decision was prompted by the significant weakening of the national currency, the acceleration of inflation and sharp exchange rate fluctuations in Russia, which is a key trading partner of Kazakhstan.

At the time, the regulator stated that it would carefully monitor the situation in the financial and energy markets and, if necessary, tighten its monetary policy to bring the inflation rate back to the target of 5%.