National Bank of Kazakhstan wants to keep inflation under control

In May the inflation rate climbed above the regulator’s forecast

In an interview with the Kazinform news agency chairman of the National Bank of Kazakhstan, Galymzhan Pirmatov explained why the regulator has increased the base rate.

“We are trying to set the base rate at a specific level in order to push inflation downwards by monetary means,” he said.

As the official noted, the inflation rate in Kazakhstan reached 14% in May and 14.5% in June, which is higher than the National Bank’s forecast.

“When external conditions are changed the demand doesn’t adjust to them immediately. The economy doesn’t work this way. Therefore, inflation doesn’t follow the changing base rate immediately. These processes take time and can be easily changed in any economy. The economy is a sophisticated system with many details you can’t see well at first glimpse. We need to take this into account when implementing monetary policy. That is why we are going to take into account future inflation or its forecast, not just the current inflation rate while making any decision,” Pirmatov said.

He also highlighted that without active actions by the regulator, the inflation rate could have been much higher.

“In other words, we will be able to talk about the efficacy of this course in the middle terms. The current decision about raising the base rate is aimed at stabilization and slowing inflation processes and expectations in 2023,” Pirmatov stated.

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