IMF predicts inflation to slip down to 8% in Kazakhstan
Inflation in Kazakhstan noticeably declined in April and may slow to 8% by year-end, according to analysts from the International Monetary Fund, who visited Kazakhstan in May as part of the fund’s mission. They also emphasized that the National Bank’s monetary policy is crucial in managing inflation and achieving the target rate.
On June 3, the Bureau of National Statistics published data showing that annual inflation in Kazakhstan slipped by 0.2 percentage points (p.p.) to 8.5%. The same trend was reported month-on-month, with prices rising by 0.4%, while the National Bank lowered the base rate by 0.25 p.p. to 14.5%.
«Even though Kazakhstan’s economy and financial sector both remain stable, risks are quite high,» the IMF stated.
The international organization praised Kazakhstan for its strict monetary policy and advocated maintaining it until inflation reaches the 5% target.
The regulator has limited room to further lower the base rate due to strong domestic demand and the potential for rising energy and utility tariffs. The IMF noted that the National Bank’s commitment to reducing inflation to its target rate is commendable and expanding its institutional independence would benefit all.
During a forum of the Association of Financiers of Kazakhstan in late May, Umut Shayakhmetova, CEO of Halyk Bank, insisted that lowering the base rate by the National Bank was necessary to meet the economy’s demand for long-term funds. As long as the base rate remains high, businesses have no choice but to cut investments, affecting the overall lending rate in the country.
