The National Bank of Kazakhstan is going to announce its next decision on the base rate on February 23. Currently, the rate is at 15.25%. The vast majority of experts believe that the base rate will be lowered by 25 basis points, while others anticipate as much as 50 to 100 b.p.
Usually, the lowering of the base rate leads to cheaper loans for regular consumers and businesses. According to 67% of experts interviewed by the Association of Financiers of Kazakhstan in February, the base rate will be decreased by 25 b.p. (to 15%). The remaining experts say that the lowering will be more serious by 50 b.p. (to 14.25%).
Analysts from Halyk Finance predict that the base rate may be cut even further by 50 to 100 b.p. to 14.25% to 14.75%. At the same time, they pointed out that pro-inflationary factors are still in place: increase in utility tariffs, salary raises, money transfers from the National Fund and moderate weakening of the tenge.
Despite all these factors inflation will continue to decline, although not as fast as last year, the experts said. The inflation rate is expected to be at 9.5% by the end of January. The National Bank is predicting inflation between 7.5% to 9.5% by 2025.
«There are many factors, that can contribute to the softening of the monetary policy such as lowering of the global inflationary pressure. It is expected to decline further this year and in the next year against the backdrop of the tough monetary policy of the majority of central banks and more rapid decline in inflation,» Halyk Finance said in a statement.
Experts noted that Kazakhstan’s real interest rate (interest rate adjusted for inflation) at 6% is relatively high. Therefore, the base rate is very likely to be lowered.
Analysts from Jusan Invest believe that the regulator will decrease the base rate by 25 to 50 b.p., although they noted that they would prefer to keep it at the same level.
The latest macroeconomic survey by the National Bank showed that analysts expect the base rate to be lowered to 13.8% by the end of this year. The median value of the forecasted base rate for 2025 and 2026 formed at the level of 10.5% and 9%, respectively.
In August 2023, the National Bank lowered the base rate from 16.75% to 16.50%. Subsequently, the regulator decreased the rate three more times after that.
