National Bank of Kazakhstan inserts no changes to base rate

The National Bank of Kazakhstan has opted to keep the base rate at the previous level of 16.75%. This rate hasn’t changed since December 2022.

According to the regulator, its decision on the base rate was driven by the risk of a price surge that still exists and high inflation expectations by businesses and the population. In March, Kazakhstan’s government reported 18.1% of inflation on a year-on-year basis.

Even though there are some signs of the inflation slowing down, it is too early to say whether this trend is stable. For instance, there are still a variety of internal pro-inflationary factors such as unstable inflation expectations, growing government expenditures and reforming of the fuel market and housing and public utilities. All these factors altogether support the idea of holding the base rate at the current level within the first half of 2023. This is necessary to lower inflations in the mid-term, the regulator said in a statement.

Almost all experts Kursiv talked to said that the regulator’s decision on the base rate was quite expected since the inflation rate hasn’t yet lowered. However, Bauyrzhan Tulepov from Jusan Invest said the opposite. He believed that the government may want to increase its spending. At least, the parliament has already approved some pro-inflationary changes to the state budget.

In 2022, the regulator raised the base rate on six occasions. In January 2022, the rate was 10.25%. followed by increasing to 13.5%, 14%, 14.5%, 16% and 16.75%. The next time the bank is going to revise the base rate is May 26, 2023.