National Bank absorbs nearly $1.2 billion amid economy overheating concerns

In January, the National Bank of Kazakhstan absorbed 4.1% of the country’s total money base or 594.3 billion tenge ($1.1 billion), according to data from the regulator. The money supply declined to $28 billion amid concerns over an overheating economy.

Under the National Bank’s classification, the money base includes cash in circulation, all settlement and current accounts, and tenge accounts and deposits held by commercial banks and other financial organizations at the National Bank.

This trend also affected the money supply rate, which declined as well. The money supply refers to all money in circulation, fixed-period deposits, and settlement and current accounts held by individuals and entities in Kazakhstan. In January, Kazakhstan’s money supply stood at $89.7 billion, marking a 2.1% decline ($1.9 billion).

Current accounts held by individuals and electronic money saw the sharpest decline within the money supply structure, dropping nearly 18% ($863 million) to $3.9 billion. As a result, this segment accounted for 44.1% of the overall money supply decline in January.

On Jan. 17, the National Bank decided to keep the base rate unchanged at 15.25%, citing pro-inflationary risks and an accelerating price surge of 8.6%, while warning of signs of an overheating economy. However, some experts argue that the regulator’s assessment may be exaggerated.

«Factors such as modest inflation, stagnation of real income and stagnant salaries contradict the very notion of economic overheating rather than confirm it,» said Madina Kabzhalyalova, head of the analytical center at Halyk Finance.