The National Bank of Kazakhstan has decided to increase the base rate from 10.25% to 13.5% with the percentage corridor +/– 1 p.p. The rate of the standing facility for liquidity provision is going to be at 14.5% and 12.5% for the standing facility for liquidity withdrawal.
According to the National Bank, this decision became necessary to support staple prices while geopolitical risks have been unfolding in Ukraine. As the bank press services noted, this was not a surprise because the government of Kazakhstan and the National Bank had awaited this worst-case scenario and are prepared to roll out anti-crisis measures.
On February 24, the bank conducted foreign exchange interventions for $104 million. Earlier this week the National Bank spent $137 million on the same purpose.
Moreover, the bank in conjunction with the government of the country is going to support bank deposits of individuals nominated in Kazakhstan’s national currency tenge.
The National Bank will next revise the base rate on March 9, 2022.
The last time the bank had increased the base rate from 9.75% to 10.25% with corridor +/– 1 p.p. was on January 24, 2022. Back then the rate’s increase was justified by lower inflation expectations and entering the target corridor of inflation at 4-6%.
The National Bank has been decreasing the base rate since July 2016 when the rate was about 15%. In February 2020 the base rate in Kazakhstan was set at 9.25%. In March of that year, the rate was increased to 12%; it dropped to 9% in July 2020. One year later, in July 2021 the rate reached 9.25%; in September it increased to 9.5% and 9.75% in October. In December 2021, the base rate was confirmed at the same level – 9.75%.
