Despite a broader global trend toward easing monetary policy, the start of 2026 introduced new uncertainty tied to the conflict in the Middle East. In response, central banks in the world’s largest economies have avoided firm forward guidance, preserving flexibility to react quickly to potential inflation shocks. Against this backdrop, the National Bank of Kazakhstan kept its benchmark rate unchanged at 18%.
Global rate and inflation trends
A quarterly review of key monetary policy indicators across 80 countries shows the median policy rate declined to 5.50% as of mid-April 2026, from 5.75% in December. At the same time, median inflation edged up to 3.4% from 3.3%. As a result, the median real interest rate slipped slightly to 2.0% from 2.1%.
From January through March, policy trends were broadly aligned across major economy groups. Among 30 advanced and large economies, including OECD members, three central banks raised rates while seven cut them. The largest reductions were recorded in Turkey and Russia.
In a separate group of 50 mostly developing economies, including Kazakhstan, 18 central banks lowered rates, while only two increased them.
Outlook for major central banks
Under the U.S. Federal Reserve’s baseline scenario, the federal funds rate is expected to decline to a neutral level of about 3.1% by the end of 2027.
The European Central Bank has held its key refinancing rate at 2.15% since June 2025, with eurozone inflation remaining close to its 2% target.
However, rising energy prices — projected by the International Monetary Fund to increase by 19% in 2026 — and the risk of unanchored inflation expectations may prompt tighter policy. A rate increase of 50 basis points is possible by year-end. With inflation at 2.6% and GDP growth slowing to 1.1%, the eurozone faces rising stagflation risks.
Kazakhstan faces internal and external pressures
Kazakhstan remains vulnerable to external shocks as well as domestic challenges requiring a calibrated policy response. Traditional growth drivers — including trade, construction and consumer services — are slowing. Real incomes are declining, and inflation expectations remain elevated despite tight monetary policy.
Sentiment among professional market participants is also cautious. According to a survey by the Association of Financiers of Kazakhstan, expected inflation over the next year stands at 11%. In the medium term, respondents expect the base rate to decline to 16.5%, down from a previous forecast of 16.75%.
While the strong tenge may help moderate price growth, inflation expectations have yet to anchor within the National Bank’s medium-term target of 5%, limiting the central bank’s ability to begin easing monetary policy.
