Kazakhstan’s regulator backs the current base rate

He said that the country isn't facing a recession

Galymzhan Pirmatov, head of the National Bank of Kazakhstan has explained the differences in the monetary policies between Russia and Kazakhstan. He said that in contrast to Russia, Kazakhstan doesn’t face the risk of recession anytime soon.

However, the official believes that amid the decline in business activities, demand and economic growth, the inflation pressure on the country continues to grow.

“Indeed, some experts compare the base rates in Kazakhstan and Russia. In February, the Bank of Russia raised the rate from 9.5% to 20%, even though later the regulator decreased the rate to 9.5% to keep the country’s economy stable. This is the reason Russia has reported deflation for the past few weeks,” Pirmatov said. The seasonally adjusted rate in Russia is much lower than the target level, so the country can gradually decrease the rate, he added.

Since June 14 the base rate in Russia is about 9.5%. The Bank of Russia has confirmed that external conditions affect the Russian economy and prevent it from further development. However, the inflation is slowing quite fast while the decline in business activity isn’t as large as it was expected in April. According to the latest data from the regulator, the price surge in May and June is quite moderate.

In Kazakhstan, the base rate was raised to 14% on June 7. The current rate is based on the balance between the risk of inflation in short and middle terms and the National Bank’s forecasts. If there are no new shocks, the current base rate will guarantee a gradual decrease in inflation by 2024.  

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