Kazakhstan’s National Bank raises base rate to 16.5%

Kazakhstan’s National Bank has raised the base rate today from 15.25% to 16.5%, despite experts’ forecasts that the regulator would keep the rate steady.

According to the National Bank, the move was necessitated by the rapid acceleration of inflation in the country and price pressures from the external sector, driven by rising inflation in Russia.

«All inflation measurement indicators show that inflation is accelerating. Annual inflation sped up to 9.4% in February. An increase in the pace of price growth is visible across all components, with the most significant rise observed in the service sector,» the National Bank said in a statement on its official website.

The regulator also revised its inflation outlook upward for the upcoming years. In 2025, inflation is expected to range between 10% and 12% and between 9% and 11% in 2026. By the end of 2027, inflation is anticipated to slow to a range of 5.5% to 7.5%. On top of that, the gross domestic product (GDP) growth forecast was revised downward to between 4.2% and 5.2% for 2025 and 2026, while in 2027, the regulator expects GDP to stand at 4.5%.

Among experts interviewed by the Association of Financiers of Kazakhstan, 69% predicted no changes to the 15.25% base rate. They backed their outlook, citing the acceleration of inflation in February to 9.4% year-on-year, which occurred against the backdrop of reforms in the utility and POL (petroleum, oil and lubricants) markets, high public spending, rising wages and steadily high inflation expectations.

Additionally, Sanzhar Kaldarov, an analyst at Halyk Finance, advocated for keeping the base rate unchanged. According to him, retaining the rate would have been a more balanced decision amid a slowdown in economic demand, weak growth in fixed capital investments and other potential risks.

At the previous monetary policy session of the National Bank on Jan. 17, 2025, the regulator kept the base rate steady at 15.25%. The central bank justified this decision by citing persisting inflationary risks and surging prices within the forecasted range of 8% to 9% (8.6%). The National Bank also noted that global food prices remain high and that inflation in both Russia and developed economies continues to accelerate.